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Chapter 11 Business Bankruptcy Basics

Chapter 11 Business Bankruptcy Basics
"Chapter 11 and Chapter 13 are the two most popular business bankruptcy options for companies that are struggling with debt but have the resources to continue operations. Both Chapter 11 and Chapter 13 offer the opportunity to restructure debts, and thus offer similar benefits. However, while any business can file for Chapter 11 bankruptcy, Chapter 13 requires that certain conditions be satisfied. Chapter 13 can be difficult to qualify for due to debt limits and a regular income. Chapter 11 business bankruptcy could be your best option if you are an individual, partnership, joint venture, limited liability company, or corporation.

Advantages of a Chapter 11

The provisions of Chapter 11 bankruptcy enable businesses to obtain debt relief without liquidating their assets or closing their doors. Working with a bankruptcy attorney highlights the advantages of Chapter 11, such as:

• Continuing to operate. In contrast to Chapter 7, Chapter 11 reorganizes debt and allows the business to continue operating normally.

• Safeguard Assets. Since the debt has been restructured and will be repaid over time, there is no need to liquidate assets or distribute funds to creditors.

• All debts are dischargeable. Whether it's past-due taxes, rent-related debt, or legal fees, everything is on the menu in a Chapter 11 filing.

Variations in Chapter 11

There is no creditor committee. Creditors can form a committee to represent their interests in a Chapter 11 case, at the expense of the debtor. However, the bankruptcy court can safeguard the business by prohibiting the appointment of a committee. Working attentively with your bankruptcy attorney can offer additional protection.

• Timeframe flexibility. Despite the fact that small businesses have only 300 days to propose a Chapter 11 plan, there is typically no deadline so long as the proposal is made within a reasonable timeframe. In contrast to other business bankruptcy options, where deadlines are of the utmost significance, this one does not impose any. Despite the absence of a strict deadline, a bankruptcy attorney will guide you through the procedure in a timely manner, ensuring that your plan is feasible and well-presented.

• Disposable income. Unlike Chapter 13, which requires the debtor to turn over their disposable income to a trustee during the commitment period, Chapter 11 does not have this requirement. However, because the debtor can retain their disposable income, the quantity of their payment plan must at least equal their disposable income.

If you are uncertain as to whether your business should file for Chapter 11 or Chapter 13 bankruptcy, you should consult with a bankruptcy attorney to streamline your petition.

" - https://www.affordablecebu.com/
 

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"Chapter 11 Business Bankruptcy Basics" was written by Mary under the Finance / Wealth category. It has been read 80 times and generated 0 comments. The article was created on and updated on 31 May 2023.
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