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Category Archives: Chapter 11

Using Cash Collateral to Pay Expenses During a Chapter 11 Case

Most Chapter 11 bankruptcies involve a number of “first day” motions, which are applications made to the court at the very start of the case to give some immediate relief to the debtor. These motions might seek approval of financing for the debtor, preference of certain creditors over others and other changes in how the […]

How DIP Financing in Chapter 11 Can Help Turn a Company Around

The goal of Chapter 11 bankruptcy is to help struggling businesses reorganize and become financially viable again. But every company — even one in Chapter 11 — needs adequate cash flow to keep operating. Debtor-in-possession (DIP) financing is a feature that can help a company get access to the cash it needs to remain operational […]

What Can Delay Completion of a Chapter 11 Bankruptcy?

Chapter 11 bankruptcy allows a financially struggling business to get back on its feet by reorganizing its debts. But there is no definitive timeline for the Chapter 11 process. Depending on numerous factors, winding up a reorganization plan can take anywhere from six months to five years or even longer. There are multiple procedural stages […]

Obtaining Credit in a Chapter 11 Bankruptcy

If your company is unable to turn a profit and has run out of lenders willing to finance it further, Chapter 11 bankruptcy could be the best way to allow the company to stay in business. A Chapter 11 also can open up other sources of credit for you. This might seem counterintuitive, because your […]

How Are Your Debts Reorganized in Chapter 11?

Chapter 11 bankruptcy offers many benefits to troubled companies, including relief from unsustainable levels of debt, a way out of burdensome contracts and some much-needed breathing room to develop a plan for the future. Once the creditors agree to a reorganization plan, the company gets a fresh start and a new balance sheet that better […]

What to Expect When You File Chapter 11 Bankruptcy

Companies in financial distress may be able to use Chapter 11 bankruptcy to restructure and reduce debts, ultimately reemerging as healthier businesses. At one time, only large corporations could afford the costs of Chapter 11, but thanks to change in the Bankruptcy Code, many small businesses are able to take advantage of a streamlined version […]

When Can a Court Convert Your Chapter 11 Reorganization to a Chapter 7?

Businesses under financial duress can choose from two alternative courses in bankruptcy. If they believe they can reorganize and return to profitability, they can opt for Chapter 11. If not, then the path is Chapter 7, by which the business’s assets are liquidated and distributed to creditors and the company ceases to exist. A business […]

Obtaining Debtor-in-Possession (DIP) Financing During Chapter 11

studio shot of bankruptcy kit

Financially distressed businesses often lack enough cash to continue operating and can no longer borrow to meet their ongoing expenses. Creditors may cut them off from further advances, causing the business to default on its obligations. This has happened with great frequency during the COVID-19 pandemic, as many companies have seen drastic and devastating impacts […]

How Often Can You File for Bankruptcy?

Close up of bankruptcy petition with calculator and writing hand

If we have learned anything during the pandemic era, it is that things are more fragile than they seem. Global economies can be stopped in their tracks, threatening the financial health of millions of individuals. Many people who filed for bankruptcy in the past may find themselves in dire financial straits due to COVID-induced job […]

COVID-19 Complicates Estimation of Future Income for Subchapter V Reorganizations

Photos of the 2020 Coronavirus Aid, Relief and Economic Security Act alos known as the CARES ACT. Photos are not of the actual bill but a simulation of the bill.

The Small Business Reorganization Act (SBRA) offers a simpler and more affordable alternative to the traditional Chapter 11 bankruptcy process, which historically has been of little use to modest-sized companies. The SBRA procedure, known as Subchapter V, allows such businesses to create three- to five-year repayment plans based their “projected disposable income.” However, the recession […]

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