Orange County Chapter 11 Bankruptcy Lawyer
While there are several different forms of consumer bankruptcy available to New Yorkers. While Chapter 7 and Chapter 13 are well-known, one of the lesser-known options is Chapter 11 bankruptcy. Chapter 11 bankruptcy is available to those who exceed the debt limits set under Chapter 13 bankruptcy. If you are considering bankruptcy, it is important to discuss your financial situation with a legal team you can trust. The Law Offices of Michael D. Pinsky, P.C. can help guide you every step of the way and determine whether Chapter 11 is right for you. Contact our office today to discuss your case with an experienced Newburgh Chapter 11 bankruptcy lawyer right away.
What makes Chapter 11 different from Chapter 13?
This limited discussion concerns cases involving primarily consumer debt, in which the debtor(s) exceed the debt limits for Chapter 13 cases (as of this writing $419,275 unsecured and $1,257,850 secured in noncontingent, liquidated debts).
An individual consumer chapter 11 case is essentially a jumbo chapter 13 case, with a very important difference. Unlike in chapter 13, creditors in such cases get to vote on the debtor’s plan of reorganization. If all creditor classes do not accept the plan, at least one class of claims that is “impaired” under the plan must accept the plan for the debtor(s) to have a chance at Bankruptcy Court approval, through a process known as “cram-down.”
Even if the unsecured creditor class votes by half in number and two-thirds in amount of allowed claims to accept the plan, any single unsecured creditor may file an objection to confirmation, triggering the application of the “absolute priority rule.”
What is the absolute priority rule?
The absolute priority rule is a judge-made rule that pre-dates the Bankruptcy Code. It requires that senior classes of claims be paid in full before junior classes of claims (creditor claims) or interests (ownership interests) may receive or retain any property under the plan. Think about that in the context of an individual case.
If a single unsecured creditor objects, an individual chapter 11 debtor may not retain his or her property under the plan. An individual chapter 11 debtor may be able to shade this result in a particular case by committing exempt property, borrowed or gifted money, or property to fund the plan. But the “new value” being contributed as an exception to the absolute priority rule must be roughly equivalent in value to all of the property that the debtor is retaining under the plan.
What if I am a business owner?
If the individual chapter debtor is engaged in business, there is a better way to obtain relief, and that is through the newly enacted Small Business Reorganization Act (“SBRA”), effective February 19, 2020. Please refer to the SBRA section on this website under Business Bankruptcy.
Contact a Newburgh Chapter 11 Bankruptcy Attorney
Making the choice to file for bankruptcy can be very valuable for your financial future. Chapter 11 bankruptcy is a lesser-known form but our team can help you understand whether it may be best for your situation. The Law Offices of Michael D. Pinsky, P.C. proudly represents clients throughout New York’s Hudson Valley in a full range of bankruptcy matters. For strong legal representation when it matters most, contact the Law Offices of Michael D. Pinsky, P.C. today to schedule a consultation with an experienced Newburgh Chapter 11 bankruptcy lawyer.