Chapter 11 Bankruptcy
What is Chapter 11 Bankruptcy?
When large corporations or businesses fall into financial distress, one of the solutions they turn towards is a Chapter 11 bankruptcy filing. Chapter 11 bankruptcy is a chapter of the Bankruptcy Code which allows for reorganization and restructuring of a company's debt. Under this form of bankruptcy, a corporation or partnership reorganizes their debt under the original payment terms and agreement, letting struggling businesses restructure their finances.
A chapter 11 debtor usually proposes a plan of reorganization to keep their business alive and pays creditors over time. Filing for bankruptcy Chapter 11 in Greensboro, NC allows businesses and their owners the opportunity to seek financial relief.
How does Chapter 11 Bankruptcy work?
The Chapter 11 bankruptcy process begins with the filings of a bankruptcy petition with the bankruptcy court serving Greensboro or the area where the debtor has a residence or legal address. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements. A voluntary petition must adhere to the format of the Official Forms prescribed by the Judicial Conference of the United States. Unless the court orders otherwise, the debtor also must file the following with the court during their bankruptcy filings:
- Schedules of assets and liabilities
- A schedule of current income and expenditures
- A schedule of executory contracts and unexpired leases
- A statement of financial affairs
If the debtor is an individual or a husband and wife, there are additional document filing requirements. These debtors must file the following:
- A certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling
- Evidence of payment from employers received 60 days before filing if it exists
- A statement of monthly net income and any anticipated increase in income or expenses after filing
- A record of any interest the debtor has in federal or state qualified education or tuition accounts (student loan interest payments)
Filing for Chapter 11 Bankruptcy in Greensboro
In order to qualify for Chapter 11 bankruptcy in Greensboro, NC, you must be able to provide all of the above, as well as meet other numerous requirements as set out by the court.
After filing for Chapter 11 reorganization in Greensboro, the debtor has up to 4 months, or with an extension up to 18 months, to file a reorganization plan. Once this period expires, creditors may file competing repayment plans, those these occur rarely. In some cases, the debtor’s operations may be downsized to reduce expenses and free up assets. Other cases result in liquidation, or a total shutdown of the debtor’s operations and the sale of its remaining property.
The court then reviews your plan for:
- Feasibility. The likelihood of success that your reorganization plan will fulfill it’s payments to creditors and that you will have to funds to complete the plan.
- Good faith. The plan must be submitted in good faith and not including means forbidden by the law.
- In the best interests of creditors. A “best interests” test is administered to ensure that the creditors receive at least as much under this repayment plan as they would if it were a Chapter 7 filing. In some cases, this means paying the creditors in full, though in most cases it refers to just a fraction of the original debt.
- Fair and equitable. The plan must also pass a “fair and equitable” test for the creditors, though this is only required if creditors vote against the proposed plan.
How much does it cost to file for Chapter 11 Bankruptcy?
The courts are required to charge both a filing fee and an administrative fee. The fees must be paid to the clerk of the court upon filing or may, with court permission, be paid by the debtor in installments with a payment plan. File fee installments are limited to four payments. The final installment must be paid no later than 120 days from the filing date of the petition. If the debtor is able to show cause to why they may need an extension the court may extend the time of any installment provided as long as the last installment payment is not paid later than 180 days from the date the petition was initially filed.
The administrative fee may be paid in installments as well and may be paid in the same manner the filing fee payments have been made. If there is a joint petition filed, only one filing fee and one administrative fee can be charged. Debtors should be aware that failure to pay any fees can result in their bankruptcy case being dismissed and they may have to go through the bankruptcy processes again.
Greensboro Chapter 11 Bankruptcy Attorneys
A good bankruptcy attorney knows all the ins and outs of bankruptcy laws, and can fully represent someone interested in Chapter 11 bankruptcy to an extent that they wouldn’t be able to do themselves. Without proper legal representation, the chances of an individual receiving a good ruling on their petition are very low. Anyone seeking to file for Chapter 11 bankruptcy in Greensboro not only needs an attorney but they also need a highly experienced attorney that specializes in bankruptcy law. If you and your business are currently in financial crisis and distress, reach out to the experienced Greensboro Chapter 11 bankruptcy attorneys at Ivey McClellan. With over 70 years of experience serving the Triad area of North Carolina, contact our bankruptcy experts today.
100 South Elm Street Suite 500
Greensboro, NC 27401
551 Monroe Street
Eden, NC 27288
Phone: (336) 623-4600