Seek Relief with the Help of a New Jersey Chapter 11 Bankruptcy Attorney
Businesses can suffer financial difficulties just like individuals. When their finance problems reach a critical point, Chapter 11 bankruptcy may be the answer. Filing for bankruptcy under Chapter 11 allows businesses to reorganize their debts and continue operating without liquidating their assets. If your business is struggling and you need short-term relief to get it back on track, you should consult with New Jersey Chapter 11 bankruptcy attorney Georgette Miller to find out if filing is the right choice.
Individuals can also file for relief under Chapter 11 in some cases. Before seeking Chapter 11 bankruptcy protection, it is important to understand the nature of a Chapter 11 bankruptcy and what filing can do for your business (or for you personally). Here is an overview of what business owners in New Jersey need to know:
What is a Chapter 11 Bankruptcy?
Named for the chapter that contains the regulations in the United States Bankruptcy Code, a Chapter 11 bankruptcy is a type of “reorganization” bankruptcy that is an option for struggling businesses. While major Chapter 11 filings are often reported in the news when companies like General Motors or K-Mart file for protection, filing for protection under Chapter 11 is a good option for many much smaller businesses as well. Pursuing a business bankruptcy under Chapter 11 is an option for businesses of any size, and it allows companies to restructure their finances through a reorganization plan approved by a bankruptcy court.
Chapter 11 protection allows the business to balance its income and expenses as well as regain profitability while remaining open for business. It is also possible for a company to sell assets and downsize in order to pay what it owes. This flexibility makes filing under Chapter 11 a desirable option for many business owners in New Jersey.
Consent of Creditors
Chapter 11 bankruptcy protection can be more stressful than other types of bankruptcy as you must secure the consent of the creditors prior to submitting your reorganization plan. If the creditors do not provide consent, your only option is to seek other options to repay creditors or file Chapter 7, which will require the liquidation of assets.
In some cases, a creditor may be swayed into approving the plan if they can be convinced that they will obtain more of what they are owed through Chapter 11 as opposed to straight liquidation of assets.
How Common is Chapter 11?
Chapter 11 is less common than Chapter 7 and 13 because most individuals under financial strain have a lower income level and higher debt threshold.
Although Chapter 11 is used primarily by businesses, it is possible for an individual to file for Chapter 11 if the level of their debt makes Chapter 13 impractical or illegal. Businesses often choose Chapter 11 because it allows the company to remain in operational while finances are reorganized and creditors are paid.
If you or a loved one has a business that is struggling financially, or you are an individual who cannot file under Chapter 7 or 13, contact Georgette Miller and Dilworth Paxson today to learn what a New Jersey Chapter 11 bankruptcy attorney may be able to help you start down the path of financial freedom. You can arrange for your initial consultation by calling us today or visiting us online.
What Debts are Dischargeable in a Chapter 11 Bankruptcy?
While the primary purpose of a Chapter 11 bankruptcy is to reorganize the filer’s debts and develop a manageable payment plan, the Chapter 11 bankruptcy process can be used to eliminate (or “discharge”) certain debts as well. This is an option you will want to discuss with your New Jersey Chapter 11 bankruptcy attorney as well, and your attorney can explain which debts are (and aren’t) eligible for discharge. Some examples include:
- Dischargeable Debts – Debts that are generally eligible for discharge in Chapter 11 bankruptcy proceedings include business loans, debts to vendors and suppliers, credit card debt, medical debt, other unsecured debts, and certain tax liabilities.
- Non–Dischargeable Debts – Debts that are generally non-dischargeable in Chapter 11 bankruptcy proceedings include child support, alimony, student loans, most taxes, and debts obtained by fraud.
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What is the Chapter 11 Bankruptcy Process?
Securing relief under Chapter 11 of the U.S. Bankruptcy Code is a process—and it is a process that requires an informed and strategic approach. When seeking relief under Chapter 11, business owners and other individuals must make smart decisions, and they must work closely with their New Jersey Chapter 11 bankruptcy attorney to ensure that they are maximizing the benefits of the process. Some of the key steps in the Chapter 11 bankruptcy process are:
- Identifying the Debtor – While this may sound obvious, it isn’t always as easy as it sounds. Should your business file for Chapter 11 bankruptcy protection, or does it make more sense for you to file personally? If you will be pursuing a business bankruptcy and your company has subsidiaries or affiliates, which entity (or entities) need to file? These are threshold questions that New Jersey Chapter 11 bankruptcy attorney Georgette Miller can help you answer.
- Filing the Chapter 11 Bankruptcy Petition (and Other Necessary Documentation) – Chapter 11 filers must submit numerous forms of documentation to the bankruptcy court—both initially and at various points during the bankruptcy process. Omitting information or failing to file necessary documents can lead to unnecessary delays and complications. Chapter 11 bankruptcy attorney Georgette Miller will handle all filings for you (or your business) to ensure that the process is as smooth as possible.
- Proposing (and Negotiating) a Repayment Plan – The repayment plan is the central focus of the Chapter 11 bankruptcy process. New Jersey Chapter 11 bankruptcy attorney Georgette Miller will work with you to develop a manageable repayment plan, and then she will negotiate with your creditors as necessary before submitting your (or your company’s) repayment plan to the bankruptcy court for final approval.
- Finalizing the Process – After negotiating the repayment plan and obtaining court approval, the last step is to finalize the process. At this stage, the repayment plan becomes legally enforceable against the debtor and the debtor’s creditors—meaning that the debtor must make all payments as scheduled, and the debtor’s creditors are prohibited from pursuing collection action based on pre-bankruptcy liabilities.
How Are Creditors Involved in the Chapter 11 Process?
During the Chapter 11 bankruptcy process, the business must secure the consent of its creditors prior to submitting its reorganization plan to the court for approval. If its creditors do not consent, it may need to consider other options to repay its creditors, such as filing under Chapter 7 (which will require liquidation of the business’s assets).
As a practical matter, however, outright rejection of a business debtor’s proposed repayment plan is rarely an issue. When you hire a New Jersey Chapter 11 bankruptcy attorney, your attorney will assess the likelihood of securing a favorable repayment plan before initiating your company’s bankruptcy case. Your attorney will be able to propose a reasonable payment plan in light of bankruptcy law and industry standards, and your attorney will be able to work with your business’s creditors as necessary. In a typical Chapter 11 scenario, it will be in the business’s creditors’ best interests to negotiate a payment plan rather than forcing a Chapter 7 liquidation—as Chapter 11 plans typically allow creditors to recover more over time. In many cases, a creditor will be swayed into approving a business’s Chapter 11 repayment plan if it can be convinced that it will obtain more of what it is owed through the Chapter 11 bankruptcy process.
Do Many Business Owners File for Bankruptcy Relief Under Chapter 11?
Chapter 11 bankruptcy filings are less common than Chapter 7 and Chapter 13 filings because most businesses (and business owners) under financial strain have a lower income level and higher debt threshold—both of which favor Chapter 7 and Chapter 13 filings in most cases. With that said, Chapter 11 filings are still quite common; and, if a Chapter 11 filing makes sense for your business, this could be the best option for eliminating your company’s unmanageable debt load and reestablishing its creditworthiness.
Can Individuals File for Bankruptcy Under Chapter 11 to Avoid Liquidating Their Assets Under Chapter 7?
Although Chapter 11 is used primarily by businesses, it is possible for an individual to file under Chapter 11 if the level of their debt makes Chapter 13 impractical or illegal. Businesses often choose Chapter 11 because it allows them to remain in operation while their finances are reorganized and their creditors are paid. As an individual, filing under Chapter 11 might make sense if you have income and you just need help getting your finances back on track.
Since creditors generally recover more through Chapter 11 reorganization than they do through liquidations under Chapter 7, going through a Chapter 11 bankruptcy can also mitigate the negative consequences of seeking relief under the U.S. Bankruptcy Code. Additionally, since Chapter 7 bankruptcies are generally less advantageous to creditors, strict limitations apply. If you need debt relief but you want to make sure the consequences of your bankruptcy are as minimal as possible, you should consult with a New Jersey Chapter 11 bankruptcy attorney.
Our Chapter 11 Bankruptcy Services for New Jersey Residents and Businesses
We provide comprehensive Chapter 11 bankruptcy representation for businesses and individuals in New Jersey. Depending on your specific needs, we can provide services including:
- Representation for business owners, executives and other New Jersey residents in Chapter 11 bankruptcy proceedings.
- Representation for small to mid-size businesses in Chapter 11 bankruptcy proceedings.
- Advice on the benefits of filing under Chapter 11 as opposed to filing under Chapter 7 or Chapter 13.
- Advice on the viability of Chapter 11 bankruptcy alternatives such as loan modifications, restructurings and workouts.
- Assistance with questions and issues arising during and after the Chapter 11 bankruptcy process, including questions related to filers’ rights as debtors-in-possession and issues related to creditor approval of proposed repayment plans.
Request a Free Consultation with New Jersey Chapter 11 Bankruptcy Attorney Georgette Miller
If you or a loved one has a business that is struggling financially, or you are an individual who cannot file under Chapter 7 or 13, contact Georgette Miller and Dilworth Paxson today to learn how a New Jersey Chapter 11 bankruptcy attorney may be able to help you start down the path of financial freedom. You can arrange for your initial consultation by calling 866-340-2596 or contacting us online.