If you are struggling financially, bankruptcy may be the best option for you. Bankruptcy can feel like a bad thing, but there are a lot of benefits when it comes to filing for bankruptcy. Read on to learn more about chapter 11 bankruptcy and why it may be the right move for you.
What to Know About Chapter 11 Business Bankruptcy?
Under Chapter 11 Bankruptcy, a business owner will work with his or her attorney to come up with a Reorganization Plan. Your business will remain open and continue to operate. Any profit generated is used to pay operating expenses first, and then pay off a portion of the debt and eliminate the balance. In New York State, if you have more than $419,275 in unsecured debt and $1,257,850 in secured debt, there you will likely qualify for Chapter 11 bankruptcy.
Chapter 11 Bankruptcy Process
You should speak with an experienced bankruptcy attorney to determine the best option for you. If Chapter 11 is the right move, your attorney will file a Bankruptcy Petition. This will include a financial statement, a list of assets, a list of liabilities, and a statement of any outstanding contracts or leases. After your Bankruptcy Petition is filed, the following steps of the process will begin:
- Automatic Stay: The Automatic Stay prohibits creditors and debt collectors from pursuing your debts. They are not allowed to contact your business. This will allow you the space and privacy you need to reorganize your debt.
- The “Reorganization Plan”: You and your attorney will develop a Chapter 11 “Reorganization Plan.” Usually, this Plan will restructure debt, cancel burdensome contracts, and reduce overhead.
- Meeting of Creditors: After filing the Bankruptcy Petition, the largest creditors will have an opportunity to meet with the attorney and business owner to get a clear picture of the business’s Reorganization Plan.
- Getting the Plan Approved: The Reorganization Plan must be approved by the New York Bankruptcy court, and then voted on by the largest creditors. The Bankruptcy Court will approve the Plan if it is in the best interests of both the business and the creditors. Additionally, the Plan will have to meet the legal standard of the “Liquidation Analysis,” which refers to whether the creditors are receiving a better, albeit minimal payment of their debt, as opposed to the company going out of business and the creditors receiving $0.00.
Contact our firm today to speak with a skilled and knowledgeable bankruptcy attorney.
CONTACT A BANKRUPTCY LAWYER TO DISCUSS YOUR DEBT OR COLLECTION ISSUE
Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.