Chapter 11 Bankruptcy in Hillsborough, NC

While that initial logistical and financial support a startup or even a newly relocated existing business receives that can initially carry the business for some time, though, there often comes a point where companies must face reality. The realities of business include:

• Weathering fluctuations in the market
• Continuing to appeal to new customers while devising and employing strategies to retain existing ones
• Taking on new secured debt or unsecured debt on top of pre-existing financial obligations
• Making hiring, service or product line expansions, production, and other strategic situations to maintain or improve profitability

While many Hillsborough businesses are able to ride the wave and keep their head above the water amid economic downturns, changes in customer demand, personnel matters, and other shifts that could easily make or break them, others aren't as fortunate. Those who fall into the latter category often find themselves needing to pursue some form of debt relief, such as Chapter 11 bankruptcy, to stay afloat.

Here at the law firm Ivey McClellan, our bankruptcy attorneys can completely understand how disappointing it may seem feeling as if you aren't able to take charge of your Orange County, NC company, make right with its creditors, and return to profitability once again. There is hope, though, and filing for Chapter 11 bankruptcy in Hillsborough with the United States Bankruptcy Court Middle District of North Carolina may be what's needed to help breathe fresh air into your company once again.

What To Know About Chapter 11 of the Bankruptcy Code

Chapter 11 refers to a section of the United States Bankruptcy Code that describes this business bankruptcy option. When considering debt relief options, many businesses opt for this type of bankruptcy because it allows them to hold on to and reorganize their debts as opposed to having to liquidate them and fold their Orange County business. This "hold" arrangement is formally known as the "debtor in possession."

Business owners in Hillsborough who pursue this debt relief option can continue to operate as normal and even take on new debts (like loans); however, the U.S. bankruptcy code requires company leadership to first secure court approval (from the trustee presiding over the case) before doing so.

Understanding the Chapter 11 Reorganization Bankruptcy Process

There are multiple stages to the Chapter 11 business bankruptcy reorganization process. Those include the following:

Filing a Business Bankruptcy Petition in the Middle District of North Carolina

Once the Chapter 11 bankruptcy petition is filed with the U.S. Bankruptcy Court, an automatic stay goes into effect on any debts the petitioner (the debtor) has. This means that creditors must stop making harassing phone calls and sending letters in an effort to collect on debts due.

Having a Meeting of Creditors in Bankruptcy Court

A debtor will soon receive notice that their attendance is required at a hearing called a meeting of creditors. During the meeting of creditors, the judge presiding over the matter, the trustee, notifies the Hillsborough business owner of:

• How they can expect the Ch. 11 bankruptcy process to unfold, as well as their rights and responsibilities
• Their obligations as part of Chapter 11 bankruptcy proceedings, including the completion of pre-bankruptcy credit counseling within 180 days of their filing, closing their existing business bank account and setting up a debtor in possession one, and drafting a reorganization plan and submitting it to the court within 120 days

Creditors also generally have an opportunity to make statements at this hearing.