Our attorneys help you deal with creditors and navigate the process
Chapter 11 is a powerful process that has allowed countless businesses throughout the United States — many of which continue to prosper today — to reform unmanageable obligations and make themselves profitable again. This process, however, is not limited to large national and multinational corporations. Many smaller businesses throughout Encino and Van Nuys have also used it to their great advantage. While it can be a complex and multifaceted process, our team of chapter 11 attorneys at the Law Offices of Michael H. Raichelson knows how to help your business use it to maximum effect. We can help you draft viable reorganization plans, negotiate with creditors and work with the court to emerge from Chapter 11 as quickly and cleanly as possible.
The Chapter 11 process
Business bankruptcy under Chapter 11 is one of the more complex processes available under the Bankruptcy Code. Like other types of bankruptcy, Chapter 11 imposes a temporary stay on collection suits, foreclosure and repossession. Similar to Chapter 13 bankruptcy, petitioners under Chapter 11 must submit a reorganization plan designed to make the business sustainable. Unlike Chapter 13, this plan is subject to direct approval by the petitioner's creditors as well as the court. These plans can use a variety of actions:
- Sale of business assets
- Renegotiation or termination of contracts
- Sale, consolidation or restructuring of divisions within the business
- Restructuring or consolidating debt
- Renegotiation of collective bargaining agreements
- Restructuring of payment obligations such as pensions
Once such a plan has been approved and accepted, the petitioner may receive a discharge of any remaining debt contingent upon its successful completion of the reorganization plan. Unlike Chapter 13 plans, Chapter 11 plans do not need to be of any specific duration. They must, however, be reasonably satisfactory to creditors in order to gain their approval. If the petitioner cannot get a plan approved within 180 days of filing its petition, its creditors may file their own plans unless the court grants an extension. For this reason, it is crucial to submit a realistic and approvable reorganization plan with the help of an experienced Woodland Hills Chapter 11 bankruptcy attorney.
Creditor involvement and the small business case
The Chapter 11 process provides for a high degree of creditor involvement, much higher than is common in Chapter 7 proceedings. A U.S. Trustee generally oversees the process outside of court but may appoint a committee of the petitioner's largest creditors to work directly with the petitioner. In smaller cases in Sherman Oaks and Northridge where the creditors may have little interest in being involved, the U.S. Trustee may have a greater degree of oversight. This situation is called a small business case and generally applies to cases where the total amount of debt involved is $2,343,300 or less.
Few processes offer the flexibility and practicality of Chapter 11 bankruptcy. However, failing to work constructively with your creditors can quickly turn the process sour. If you are considering Chapter 11 bankruptcy for your business, you need an experienced attorney who can work with your creditors on your behalf and keep the process on track.
Call us to learn how Chapter 11 can help streamline your business
At Raichelson Law, P.C., our lawyers have years of experience assisting businesses throughout Los Angeles and Ventura County in restructuring through Chapter 11. Before you make a decision about the future of your business, call us at 818-444-7770 or contact us online to schedule a free no-obligation consultation.