There are three main types of bankruptcy cases in Pennsylvania: Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy, which is also known as “reorganization” bankruptcy due to its inclusion of a feature known as a “reorganization plan” or “plan of reorganization.” Though some sole proprietors file for business bankruptcy under Chapter 13 or even Chapter 7, most business bankruptcies are Chapter 11 cases. In fact, corporations, partnerships, and limited liability companies are all prohibited from filing under Chapter 7 or Chapter 13.
Though all forms of bankruptcy have their own sets of complexities and considerations which must be weighed carefully, Chapter 11 bankruptcy is among the more complicated forms of bankruptcy, particularly for business owners who have no prior experience dealing with bankruptcy law in Pennsylvania. If you are thinking about filing for Chapter 11 bankruptcy for your business in Philadelphia, it is in your best interests to obtain assistance from a skilled, knowledgeable, and experienced reorganization bankruptcy attorney. To discuss your company’s bankruptcy matter in a free and confidential legal consultation, call Sadek & Cooper Law Offices at (215)-545-0008.
What Happens When a Company Files for Chapter 11 Bankruptcy in Pennsylvania?
Many people hesitate to file for Chapter 11 bankruptcy – or, for that matter, any other form of bankruptcy – because they have been misled by harmful myths and are concerned that a bankruptcy case will forever destroy their financial viability, such as their credit score and ability to obtain loans.
On the contrary, by helping you get control of or be released from your existing debts, bankruptcy will actually position you to make better, healthier financial choices in the future, ultimately allowing you to build better credit, protect certain assets, reorganize your business to permit for its continued operation, and in some cases, perhaps even rescue your company from the brink of collapse. Moreover, filers benefit from a rapidly acting court injunction known as the “automatic stay,” which generally affords immediate protection from collection actions including but not limited to repossession and foreclosure.
In the appropriate situation, the benefits of declaring Chapter 11 bankruptcy for your business are numerous. But how does the process work, and what should you expect as a business owner? The following is an oversimplification, but will supply a general idea of how a Chapter 11 bankruptcy case unfolds in Philadelphia.
Most Chapter 11 cases will begin in the United States Bankruptcy Court for the Eastern District of Pennsylvania, which handles bankruptcy cases arising in Philadelphia. The debtor or filer will become known as a “debtor in possession,” meaning a debtor who maintains control over a company’s assets as the business works through its Chapter 11 bankruptcy case.
The reason Chapter 11 bankruptcy is sometimes described as “reorganization” bankruptcy is that, not unlike a Chapter 13 bankruptcy case, it prominently features a long-term reorganization plan. The purpose of this plan, which must be approved by the bankruptcy court that is handling your case, is to create feasible, manageable provisions for repayments toward your creditors, who will be organized and prioritized within the plan based on their status as secured or unsecured creditors. The plan, which may take several years to complete, overrides prior agreements between filer and creditor(s), thus providing a fresh start for troubled businesses that have been struggling to keep up with their financial obligations to lenders.
Depending on their goals, debts, and assets, Chapter 13 or potentially Chapter 7 bankruptcy may be a more appropriate financial strategy than filing under Chapter 11 for certain sole proprietors. If you own your own business in Philadelphia, rely on the experienced attorneys of Sadek & Cooper Law Offices to help you make an informed decision about how to proceed strategically with your bankruptcy matter.
Philadelphia Chapter 11 Reorganization Lawyers for Small Businesses, Partnerships, and Corporations
The Chapter 11 reorganization attorneys of Sadek & Cooper Law Offices have years of experience serving a variety of Philadelphia-based entities, such as small businesses, family-owned businesses, S corporations, C corporations, limited liability companies, general partnerships, limited partnerships, and limited liability partnerships, that need assistance with debt management and financial planning through the versatile powers of business bankruptcy. We are proud to work with companies throughout Northeast Philadelphia and Center City, including Chinatown, Fitler Square, Logan Square, Market East, Old City, Rittenhouse, Society Hill, Washington Square West, and beyond.
Regardless of whether your company needs immediate crisis intervention, or you are simply considering bankruptcy as a potential possibility, the knowledgeable and dedicated Chapter 11 attorneys of Sadek & Cooper Law Offices are ready to assist however we can. Further, if we determine that bankruptcy would be an inappropriate method of financial reorganization for your company at this point in time, we can help you compare various alternatives to bankruptcy. However, we cannot render assistance unless we are aware of your company’s needs, so please do not hesitate to contact our law offices at (215)-545-0008 today for a free and confidential consultation.