It is important to note that legal professionals, as well as accountants and financial advisors, might be one of the most important business decisions you can make if you are trying to work out debt or reorganize a small business in bankruptcy. If you are facing debt or would like to learn more about how you can file a Chapter 11 plan of reorganization, contact the experienced bankruptcy attorneys at the Law Offices of Michael D. Pinsky, P.C. today to get started.
What steps should I take after I file for Chapter 11 bankruptcy in New York?
There are many steps that should be taken as soon as the case is filed in order to stabilize the debtor’s business, and depending on the nature and size of the business. These steps include:
- Interim Bankruptcy Court approval for post-petition financing and/or the use of the proceeds of repetition lenders’ collateral (also known as “cash collateral”);
- The uninterrupted payment of employees and employee benefits;
- Providing for bankruptcy utility deposits;
- Maintaining some or all of the debtor’s pre-petition financial management arrangements (e.g., the continued use of payroll processing firms and the associated debtor deposit and sweep accounts);
- Possible store closures and going out of business sales; and
- Payment of critical vendors for pre-petition obligations (an otherwise prohibited practice), etc.
The employment of the debtor’s professions and the applications and disclosures that show the absence of disqualifying conflicts should be filed immediately after the case starts. The Bankruptcy Court must also approve this before moving forward.
What is the goal of the Chapter 11 reorganization plan?
The objective of the Chapter 11 debtor in possession is to gain approval from Bankruptcy Court for the reorganization plan that will lay out ways in which to restructure debts and permit the debtor to emerge from bankruptcy. In most cases, a confirmed plan will substitute the debtor’s obligations to each class of creditors for obligations to that class.
In ordinary circumstances, the Bankruptcy Court will enter a case scheduling order based on routine timelines that are formulated by the U.S. Trustee, for the filing of a disclosure statement to accompany the reorganization plan, for the hearing on approval of the disclosure statement, and for the hearing on confirmation of the plan. In some situations, the Bankruptcy Court can permit the debtor to combine the disclosure statement with the plan in less complicated cases to save money and time.
The disclosure is required to contain “adequate information” for a creditor to make an informed decision about whether they want to accept or reject the plan. The debtor can initially file and solicit approval of their plan, which can also extend to the Bankruptcy Court.
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.