Chapter 11 Bankruptcy
Chapter 11 of the Bankruptcy Code is generally utilized by corporations or larger partnerships. Under a Chapter 11 bankruptcy, an entity can engage in a reorganization. Alternatively, individuals with debts in excess of the Chapter 13 Bankruptcy debt limitations cited in 11 U.S.C. 109 (e) may also file a petition under Chapter 11 Bankruptcy. While Chapter 11 filings are less common than Chapter 7 and Chapter 13 bankruptcies, Chapter 11 does present a viable path for entities to reorganize their finances and achieve a fresh start.
How Does A Business or Individual File for Chapter 11 Bankruptcy in Pennsylvania?
A Chapter 11 Bankruptcy case commences with the filing of a petition with the bankruptcy court. Most bankruptcy cases filed by the bankruptcy lawyers at Sadek & Cooper Law Offices, LLC are filed in the United States Bankruptcy Court for the Eastern District of Pennsylvania located in Philadelphia, Pennsylvania.
Upon filing a petition in bankruptcy under Chapter 11 the debtor(s) automatically assumes an identity known as the “debtor in possession.” Under 11 U.S.C. Section 1101, the term describes a debtor who retains possession and control of its assets while proceeding through the Chapter 11 bankruptcy. The debtor in possession must adhere to certain conduct and follow the Chapter 11 plan that is approved in the court For instance the debtor in possession is required to provide a monthly income report, report on new bank accounts, and operating expenses to the court.
Sadek & Cooper Law Offices, LLC mostly files Chapter 11 Bankruptcy cases on behalf of small businesses. Whether a debtor in Chapter 11 Bankruptcy qualifies as a “small business bankruptcy” is determined by the Federal Bankruptcy Code specifically 11 U.S.C. Section 101 (51C) and requires debts due and owing of $2,000,000.00 or less and the absence of an appointment of a creditor committee. As in Chapter 7 Bankruptcy and Chapter 13 Bankruptcy proceedings an automatic stay is invoked upon filing for Chapter 11 Bankruptcy reorganization. The automatic stay under 11 U.S.C. Section 362 (a) provides a stay of all judgments, repossession efforts and all other collection activities.
What Is A Chapter 11 Bankruptcy Plan?
All Chapter 11 bankruptcy plans differ based on the assets, debts, and goals involved. Under 11 U.S.C. 1123 (a) (1), a Chapter 11 Bankruptcy debtor must file a plan which designates classes of creditor claims and treatment of such creditor claims. Generally, a Chapter 11 Bankruptcy reorganization plan will classify claim holders into several classes. At the highest level of priority are secured creditors. Other classes of creditors entitled to a lowed level of priority include unsecured creditors entitled to priority, general unsecured creditors and equity security holders.
The debtor in possession may also plan for and utilize Chapter 11 Bankruptcy for the purpose of liquidation of business assets. However, after the plan is confirmed, the debtor is required to make plan payments in accordance with the terms enumerated in the bankruptcy plan of reorganization. The confirmed plan creates new agreements between the debtor and the creditor and supersedes previous agreements.
A Philadelphia Bankruptcy Attorney At Sadek & Cooper Can Help with Chapter 11 Bankruptcies
Chapter 11 Bankruptcy can be complicated; however, the bankruptcy attorneys at Sadek & Cooper Law Offices are proud to assist companies and indviduals seeking bankruptcy law guidance. Our firm offers free consultations and reviews of your financial situation to determine whether a Chapter 11 Bankruptcy Law strategy that will work for your company.
If you have any questions regarding Chapter 11 Bankruptcy and your legal situation, call the bankruptcy attorneys and lawyers at Sadek & Cooper Law Offices at (215) 995-2543. We offer a FREE and confidential consultation with one of our Chapter 11 bankruptcy attorneys in our main Philadelphia law office to further discuss Chapter 11 Bankruptcy.