Published on August 27th, 2020 | by Bibhuranjan0
Top 3 things you should know about reorganization under Chapter 11
Many businesses wonder what their options are when it comes time to file for bankruptcy, filing for chapter 11 could be their best choice. A company would want to choose this option if the amount gained from liquidating all their assets would be less than operating as normal. Chapter 11 gives the company a chance to restart and still not have any of the operations be influenced. A business attorney can hep figure out options when a business files chapter 11 bankruptcy, Birk Law Firm specializes in these types of bankruptcies.
What is Chapter 11?
The first thing we need to discuss when asking the top 3 things to know about reorganization under chapter 11 is, what is chapter 11? The quick answer would be that chapter 11 bankruptcy provides a process for rehabilitating a company’s faltering business. Many companies file chapter 11 because they are still able to run the business, and it also allows them to control the bankruptcy process while they attempt to become profitable again. It additionally provides bankruptcy protection from creditors as they do this. The goal of the bankruptcy court is to help businesses and companies keep operating while they try to figure out a plan to manage their debt. The bankruptcy court will review the overall operations, determine a reorganization plan and halt the actions of creditors to enable the company to get a grip on its finances in the hopes it can become profitable.
Starting the Chapter 11 Process
When a company is considering filing chapter 11 bankruptcy, the first thing they should do is hire an experienced business law firm to help them through the process. The business law firm will meet with the company executives to explain the process and answer any and all questions the company might have. They will also begin to gather the necessary corporate documents that are needed in order to support a chapter 11 bankruptcy. These business lawyers will be there to help consult and work with a company through the process while allowing the company to still maintain its normal business operations.
Approval of the Chapter 11 Plan
Approval of a chapter 11 plan is what they call “confirmation” The court the chapter 11 was filed holds all the power in regard to getting these plans approved. To do this, the plan must meet several requirements in order to begin the reorganization process. The requirements include:
Feasibility: The chapter 11 plan is reviewed by the bankruptcy court and they must determine if the proposed plan has a likelihood of succeeding. In better terms “is it feasible”. The company or business that is filing the chapter 11 must show the courts that is has the ability to raise the funds needed over the set time period the plan states.
Best interest of creditors: In order for the company to be approved of a chapter 11 bankruptcy, the plan must be in the best interests of the creditors. Essentially, the creditors must receive the amount they would be owed if the company was filing for chapter 7 bankruptcy. This ensures the creditors will get some of their money back while still helping the company that is filing get a better grasp of their finances.
Good Faith: The court will have to determine if the plan for chapter 11 has been created in good faith and not by the means prohibited under the law.
Fair and Equitable: This entails that the secured creditors have to be paid, over the months or years the plan requires. And that the owners of the company can’t retain anything of value because of their equity interests. Unless, their other financial obligations are paid off in full.
Hire a Chapter 11 Bankruptcy Attorney to Help You
There are many options and plans a company can take when looking at filing for chapter 11 bankruptcy. It is a process that is difficult for many business owners as they do not know the ins and outs of the bankruptcy courts laws. A bankruptcy attorney can help a company file for chapter 11 bankruptcy in the hopes that it can start turning a profit. They will handle all of the processes necessary to file the chapter 11 while the business owner keeps running the business they love so much. If your company is thinking of filing for chapter 11 bankruptcy, hire a bankruptcy attorney today.
As mentioned before, Birk Law Firm is a great bankruptcy attorney that can help you through this process. Reasons why you should choose Birk Law for your bankruptcy needs:
- They are located close to the federal courthouse in Cape Girardeau, which means you have easy and prompt access to the court clerk’s office, judges and courtrooms.
- Attorney Kelvin Birk holds a law degree and is also a CPA. Not many lawyers can say that. He brings both a sharp legal mind and financial acumen to the table.
- They have a top-notch team of legal specialists who will work on your case and organize all your paperwork and forms. All you have to do is drop off your relevant documents and they will take it from there.
- If you’re a farmer or rancher, you will have the unique experience of working with a lawyer who knows agriculture and the outdoor life. Attorney Kelvin Birk grew up on a farm and currently lives on one, so he understands where you’re coming from.
- Excellent client service is very important to Birk Law Firm, and they will always return phone calls promptly and keep you updated about the progress of your case.
Reach out to Birk law firm today if you are in need of a bankruptcy attorney.