Category Archives: Bankruptcy
What Are the Basic Tests of Eligibility for Subchapter V Reorganization?
Subchapter V of the U.S. Bankruptcy Code represents a streamlined, more cost-effective option for small business debtors seeking protection from creditors while reorganizing debt. Introduced as part of the Small Business Reorganization Act of 2019, it simplified the reorganization process with the intent of reducing the complexities and expenses typically associated with Chapter 11 filings. […]
How Does an Adversary Proceeding Differ from a Contested Bankruptcy?
In the course of a bankruptcy, significant disputes can arise that lead to litigation in one of two forms: adversary proceedings or contested matters. Whether initiated by a creditor, the trustee or the debtor, they can affect in large part the outcome of the bankruptcy case. Although there are similarities between them, they are governed […]
Deciding Whether Chapter 11 Is Right for Your Business
In the face of financial distress, businesses can find themselves weighing the options available to address their operational challenges. Among these options, Chapter 11 bankruptcy stands out as a potential avenue for businesses to restructure their debts and reorganize their operations. This form of relief offers advantages but also involves complexities that necessitate careful consideration. […]
How Leases and Executory Contracts Are Handled in Chapter 11
For a business in Chapter 11 bankruptcy, leases and executory contracts can represent valuable assets or burdensome obligations. An executory contract is one where both parties have unperformed obligations. Leases, where rent payments remain outstanding and the landlord has obligations to maintain the property, fall under this category. Here are some key points a Chapter […]
Defending Against Adversary Proceedings Brought by Creditors
Bankruptcy offers a fresh start for debtors struggling with overwhelming debt. However, this process isn’t always smooth sailing. Creditors may object to various aspects of the bankruptcy case by bringing an adversary proceeding — essentially, a case within the case. Such proceedings can arise when creditors challenge discharge of debts, allege fraudulent transfers or attempt […]
How Chapter 11 Restructures Business Debt
When a business finds itself drowning in debt, Chapter 11 bankruptcy can offer a lifeline. Unlike Chapter 7, which liquidates assets to repay creditors, Chapter 11 allows for debt reorganization. This means the business gets a chance to develop a plan to reorganize its debts and return to solvency. Here’s how Chapter 11 tackles these […]
Using Chapter 13 for Relief From Credit Card Debt
Crushing debt from credit card charges can feel inescapable. Minimum payments barely make a dent, and the stress of looming balances can be paralyzing. If you’ve explored other options and are still overwhelmed, Chapter 13 might be a path to financial freedom. Here is a primer on how this form of bankruptcy treats credit card […]
The Basics of DIP Financing During a Chapter 11
In a Chapter 11 bankruptcy, the person or corporation under bankruptcy protection is usually designated a debtor-in-possession (DIP), which means they can continue to manage the business freely though subject to obtaining court approval for major decisions. But a successful reorganization of the business requires infusion of additional capital. DIP financing is a remedy for […]
When Can a Chapter 11 Be Converted to a Chapter 7?
Businesses under financial distress can pursue a Chapter 11 bankruptcy if they believe they can reorganize and return to profitability. However, as the reorganization proceeds, there may be obstacles that cannot be overcome. In certain circumstances, a conversion to a Chapter 7 liquidation plan may be necessary. A Chapter 11 debtor usually has the right […]
Grounds for Creditors’ Relief from the Bankruptcy Automatic Stay
Once a bankruptcy petition is filed in court, an automatic stay goes into effect that prevents creditors from taking further action to enforce most debt obligations. The purpose of the stay is to give the debtor time to reorganize its finances through the bankruptcy process. The stay remains in effect throughout the duration of the […]
