CHAPTER 11 BANKRUPTCY
You may have read news stories about large corporations like United Airlines and General Motors filing for Chapter 11 bankruptcy. This can lead to the belief that this form of bankruptcy is only useful for huge, publicly held corporations. In reality, most Chapter 11 filings are much more modest in scale, and some small businesses in Washington and Oregon can benefit from a Chapter 11 reorganization. When this type of bankruptcy is filed, there is an immediate benefit, because an automatic stay will be granted by the court. This means that creditors will be required to suspend their collection efforts while the reorganization process is underway (though there are some exceptions).
It should be noted that a small business owner could potentially file for a different form of bankruptcy, like a Chapter 13. This is often a better choice, because a Chapter 11 bankruptcy is more complicated, there are more risks involved, and the legal costs can be significant. However, under federal laws, a Chapter 11 bankruptcy is the only option for limited liability companies, corporations, and partnerships. Our firm has a great deal of experience with all different forms of bankruptcy, and we can evaluate your situation and guide you toward the right solution.
If a Chapter 11 reorganization is decided upon, the filing party will maintain all the decision-making authority, and the business can operate as usual at first. A reorganization proposal will be created to present to the court, and this will often include some reduction in the size and scope of the business. The filing party has four months to come up with a reorganization plan. This is called the “exclusivity period,” and the court has the power to extend it if there is a sound reason to do so. If the plan is accepted, the debtor must follow all provisions that are contained within the plan and make the agreed-upon payments in a timely manner.
Discuss Chapter 11 With a Bankruptcy Attorney
Our bankruptcy law firm serves people in the greater Portland area, other major cities in Oregon, and residents of Tri-Cities, Tacoma, and Vancouver, Washington. We would be more than glad to answer any questions that you may have about Chapter 11 bankruptcy, and we offer free initial consultations. If you would like to schedule an appointment, we can be reached by phone at 1-800-682-9568.