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Chapter 11 Bankruptcy Attorney in Los Angeles and San Fernando Valley California

Business Bankruptcy

While it focuses on business, it is also applicable to people having large debts. BRB (Business reorganization bankruptcy) also known as Chapter 11 bankruptcy of the United States (Bankruptcy Code) applies to individuals having a large amount of debts that exceeds debt limit for Chapter 13 bankruptcy, and also by businesses of all sizes with heavy debt burdens. In Chapter 11, your debts are reorganized to propose a plan for profitable post bankruptcy. The court and your creditors approve the plan on how to repay the debts. Usually, there is no need to appoint a trustee; but in case the judge appoints one, the trustee’s job is to take control of your property. Possible reasons why a trustee could be appointed include dishonesty, fraud, gross mismanagement, incompetence, etc. Chapter 11 may have certain advantages, but it is more time-consuming as well as costlier than other bankruptcy forms.

Chapter 11 As Applied To Businesses

The thesis of Chapter 11 Business Bankruptcy is that a reorganized business is of more value than selling its assets separately. A small business is a business with less than 500 employees, as defined by the Small Business Administration. According to the U.S. bankruptcy code, a debtor (small business) is an individual that engaged in business activities that has a total debt of $2.19 million. Chapter 11 allows the affected business to continue operations, cancels some of its debts, and transfers part or all of the reorganized company to the creditors whose debts were cancelled. At this point, the business owners lose major control over the business to the bankruptcy court. The bankruptcy court must approve the following amongst other things: • Shutting down or expanding business operation • Entering into or (breaking a lease) of either real or, in some cases, personal property • Mortgage and other financial arrangement that allows the debtor to borrow money after the case is filed A business which has very few bankruptcy options may file for Chapter 11 if such has the tendency of surviving as well as profiting on its own; otherwise the case will be dismissed and converted to Chapter 7. For proper guidance, consult with your Chapter 11 Bankruptcy Attorney in Los Angeles and San Fernando Valley California.

Chapter 11 As Applied To Individuals

Chapter 11, bankruptcy, was originally intended for businesses, but in 1991, U.S. Supreme Court Case included individuals who are eligible. Individuals whose debts are above the limit of filing a Chapter 13 bankruptcy and whose income is greater than what is allowed by Chapter 7 are seen as eligible. Eligible individuals are those who having substantial (personal earning) potential, but whose debt exceeds the limit of Chapters 7 and 13. Filing Chapter 13 is not common in Southern California as a result of high real estate value and mortgage debts, unlike other parts of the country. It is not uncommon to see a celebrity filing for Chapter 11 Bankruptcy; most likely because of a bad investment. What makes celebrities eligible to file for Chapter 11 Bankruptcy is their earning power. To determine your options, you need an experienced and knowledgeable Chapter 11 Bankruptcy Attorney in Los Angeles and San Fernando Valley California, as the debt limits are separate for secured and unsecured ones, and the value of your property is used in its calculation to determine Chapter 11 versus Chapter 13.

Reorganization Plan Process

In Chapter 11 Bankruptcy, the plan is submitted to the Court (Bankruptcy) on your behalf, proposing how best to pay off the debt and how much of the debt will be paid. At this point, your creditors will have no other option, but to vote on the approval or denial of the organization plan, after which the Bankruptcy Court Judge will consider the plan for approval. For a reorganization plan to be accepted, two-thirds of the creditors in number, and 50% of creditors in dollars must vote in favor of the plan. Chapter 11 Plan provides a debtor with important tools for rearranging financial affairs in order to clear the debt with time.

Advantages Of A Chapter 11 Bankruptcy For Business

A company benefits from a Chapter 11 Bankruptcy in the following ways: • The company is reorganized, not liquidated. Operations continue in the business in a bid to yield enough profit to pay the debt. Jobs are saved, and assets are retained. • There is adjustment of interest rates. This means that excessively high rate on loans secured by commercial equipment, vehicle, or real estate can be lowered. • Debtors are allowed to cure defaults on obligations such as mortgage or leases. Usually, when a borrower defaults on legal obligations, the lender “accelerate” the obligation. That is to say that the lender asks the borrower to pay the debt in one lump sum payment. But if the borrower has filed a Chapter 11 Bankruptcy, the debt acceleration can be cancelled, and obligation is returned to pre-default status. Having helped a lot of clients in the past, you can count on your Chapter 11 Bankruptcy Attorney in Los Angeles and San Fernando Valley California to guide you in the right path. • Creditors and equity participants would not lose much compared to what would have been the case had the company been liquidated. • The bankruptcy code allows debtors to extend unsecured tax debts for up to a period of five years using the Chapter 11 reorganization process. • The creation of Chapter 11 Plan for the restructuring of the debtor’s business provides terms that will govern reorganization of the debtor’s financial structure/operation, and also provides treatment of all claims against the debtor. Contact the Leventhal Law Group, P.C. I specialize in helping individuals and small-to-medium sized businesses file for Chapter 11 Bankruptcy, Chapter 7 Bankruptcy, or Chapter 13 Bankruptcy as the case may be. My office offers free consultations too. Call me today at 818-347-5800, or visit my office which is conveniently located near 101 Freeway in Woodland Hills – at the west end of the San Fernando Valley

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