What is Chapter 11 Bankruptcy

Posted by Kevin Ryan | Aug 25, 2016 | 0 Comments

Chapter 11 bankruptcy is most often used in situations where the debtor is a business, or an individual who is involved with a large number of real estate investment properties.   There are large business Chapter 11 cases and a more streamlined type of Chapter 11 for small businesses.    This blog post will be focused on the latter, the small business Chapter 11 case.  

A small business Chapter 11 case requires the debtor to file a Voluntary Petition just like all other types of bankruptcy cases.   The Voluntary Petition informs the U.S. Bankruptcy Court who the debtor is ( a corporation or an individual person), the debtor's address, and generally about the debtor's business, amount of debts, value of assets, etc.   In the case of a corporation, the person filing the Chapter 11 bankruptcy must first be appointed by a resolution of the corporation, in accordance with its bylaws, granting the legal authority to this officer to file the Chapter 11 case.  

The attorney for the corporation and any professionals involved with the case ( such as a Certified Public Accountant, Appraiser, Realtor, auctioneer, etc) must also be officially appointed by the corporation, and then the U.S. Bankruptcy Court.   

Once a small business Chapter 11 case is filed in the Southern District of Alabama, the Office of the Bankruptcy Administrator appears in the case for the purpose of overseeing the administrative requirements of the United States Bankruptcy Code.   The Debtor has a monthly obligation to have reports of the debtor's income, expenses and assets filed with the Court.   

The debtor in Chapter 11 bankruptcy cases is initially referred to as the "debtor in possession."  This designation applies because the debtor remains in control of the property of the corporation while working towards Bankruptcy Court approval of a Plan of Reorganization.   The debtor is also required to file a disclosure statement.  

The disclosure statement is a document that must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor's plan of reorganization.

The Chapter 11 Plan of Reorganization must include a legal classification of the claims and how the creditors will be treated under the Plan. The Bankruptcy Code permits certain creditors ( namely the general unsecured creditors) to be paid less than what is required under the debtor's pre-bankruptcy contract with the creditor.  

Paying less than required to a creditor in Ch 11  is referred to as "impairing" the claim.    The main purpose of filing a Chapter 11 case is to enable the debtor to pay what the debtor can afford to pay creditors for a set period of time, and then at the completion of the Plan of Reorganization receive a discharge of the balance of the impaired claims.  

Chapter 11 is a type of bankruptcy that can be very complex. It often requires the participation of several professionals ( lawyers, CPA's, realtor, auctioneer, etc).   If you are considering the filing of a business bankruptcy, Call me. I'll be there for you. 

About the Author

Kevin Ryan

"I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. And I'll make them go away."  -Kevin Ryan, Attorney at Law Kevin Ryan is a graduate of the College of Wooster and the Cleveland Marshall College of Law. He is admitted to practice before all Alabama State Courts, the United States District Court for the Southern District of Alabama, and the United States Bankruptcy Court for the Southern District of Alabama. The United States Bankruptcy Court is a part of the United States District Court. Since 1998, Mr. Ryan has represented thousands of individual clients in bankruptcy, criminal, divorce, probate, personal injury, and real estate matters.  Attorney Ryan is also a licensed real estate agent in Alabama.  He handles  Bank-owned properties, short sales, and conventional sales in addition to conventional real estate listings.   This wide range of experience enables Attorney Ryan to take a wider look at your legal matter. It is important to consult with an attorney who can see from experience how other legal issues may affect your situation, and advise you accordingly. Personal Info Kevin Ryan is a member of First Baptist Church in Silverhill, Alabama. He resides in Silverhill with his wife Jessica and their three children. Committed to helping our Clients achieve a fresh financial start Our practice focuses primarily on consumer bankruptcy matters under Chapter 7 and Chapter 13 of the United States Bankruptcy Code.  Our law practice also includes matters where bankruptcy litigation, appellate work, or involvement in civil lawsuits is needed by a client.     No representation is made that the quality of any of these legal services is of higher quality than another attorney or law firm.   The United States Bankruptcy Code requires the following notice:  We are a Debt Relief Agency, which means we help people get legal relief from their Debts through the bankruptcy process. Interested in learning more about our bankruptcy attorney near Mobile, Alabama? Contact Us for help with chapter 7 bankruptcy or chapter 13 bankruptcy in Mobile, Baldwin and Washington counties. Education Juris Doctor, Cleveland Marshall College of Law, 1997 Employed full time as a paralegal while attending law school in the evenings. B.A., The College of Wooster, 1994 NCAA Div.III All Conference (N.C.A.C.) Football Team : Defense 1993; Most Inspirational Senior Award 1993; Co-captain 1993; Letterman 1991-1993; Phi Sigma Alapha Fraternity 1991-1994; Athletic Director Jurisdictions Admitted to Practice Alabama

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I'll BE there for you.

I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. - Kevin Ryan, Attorney at Law

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