Tag Archives: bankruptcy
Preference Actions in Chapter 11: How to Defend Against Them
A preference in a Chapter 11 bankruptcy is generally defined as a debtor’s pre-filing transfer of property that unfairly favors one creditor over others. The bankruptcy code authorizes the trustee to bring an action to “claw back” the transfer and bring the property back into the bankruptcy estate. The purpose of a preference action, as […]
When Can Confirmation of a Chapter 11 Plan Be Revoked?
Once a Chapter 11 plan is confirmed by the bankruptcy court, it becomes the blueprint guiding the debtor’s future business operations and the distribution of payments to creditors. Confirmation is designed as a final, stabilizing event, on which debtors and creditors rely to plan their next steps. Due to its pivotal role, undoing or revoking […]
Preparing for Chapter 11: What to Do and What Not to Do
For a business facing financial distress, the weeks or months leading up to a Chapter 11 bankruptcy are often critical. The success or failure of a reorganization is frequently determined not by what happens in court but by steps or missteps made just before filing. Businesses unwittingly can undermine their own cases by delaying action, […]
Why the Disclosure Statement Serves as a Central Pillar in Chapter 11
In a Chapter 11 bankruptcy, the disclosure statement is a mandatory document that bridges the gap between a debtor’s reorganization plan and creditors’ rights to vote on that plan. Its function is to provide adequate information to creditors, enabling them to make an informed judgment about whether to accept or reject the proposed plan. The […]
Ways to Overcome Objections to Chapter 11 Plan Confirmation
Objections by creditors can complicate a Chapter 11 reorganization. In reality, though, objections to plan confirmation process can often be surmounted. Experienced attorneys routinely address them and many can be resolved without ever heading to a contested hearing. The following are common grounds for creditor objections to plan confirmation: Feasibility concerns — A creditor may […]
What Factors Bear on the Duration of a Chapter 11 Case
The duration of a Chapter 11 bankruptcy is among the chief concerns raised by business owners seeking debt relief. While Chapter 11 offers businesses flexible tools to restructure, its timeline is highly dependent on the company’s organization and financial situation. There is no universal average timeline, but several predictable factors can influence how swiftly or […]
How Small Businesses Keep Operating During a Subchapter V
Subchapter V is a special form of Chapter 11 bankruptcy that was created to give distressed small businesses a chance to reorganize and return to financial health. Key to this remedy is that a business is allowed to stay open. Owners retain control, operations proceed without interruption and debts are restructured into manageable payments, for […]
Warning Signs That a Business Should Consider Chapter 11
For many struggling companies, Chapter 11 bankruptcy represents a viable option for reorganizing debts and returning to solvency. This remedy allows a company to restructure obligations under the supervision of the bankruptcy court while remaining in operation. Unfortunately, business owners too often delay filing for Chapter 11 until a crisis peaks, which can limit their […]
Understanding the “Subsequent New Value” Defense in Bankruptcy
When a business files for bankruptcy, payments made to creditors during the 90 days prior to filing come under scrutiny. Bankruptcy trustees or debtors in possession may seek to “claw back” these payments — known as “preferences” — to ensure fair treatment of all creditors. However, the Bankruptcy Code protects vendors who continue working with […]
What Businesses Need to Know About Involuntary Bankruptcy
Involuntary bankruptcy occurs when creditors file a petition in court to force a debtor into proceedings. Such cases can arise in the context of disputes with creditors, acute liquidity crises or suspicions that company insiders are moving or hiding assets to evade legitimate debts. Businesses should take the risk of an involuntary bankruptcy seriously, as […]
