Tag Archives: chapter 11
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 […]
How Different Types of Debt Are Reorganized in Chapter 11
Chapter 11 offers financially troubled companies relief from unsustainable levels of debt and a path for returning to profitability. In this type of bankruptcy, the debtor — or in rare cases, a creditor — proposes a plan outlining how debts will be partially repaid over a set period of time. A plan will be confirmed […]
Creating a Chapter 11 Plan That Is Likely to Win Confirmation
A Chapter 11 plan is essentially a contract between a company and its creditors, governing how the company’s debt will be reorganized and managed during the Chapter 11 case. Every plan must go through court approval, which generally requires that it be workable and in the best interests of creditors. In fact, creditors who believe […]
Advantages of an Individual Debtor Choosing Chapter 11 Instead Chapter 13
A common misconception is that only businesses can use Chapter 11 for debt reorganization. But in fact, individuals seeking bankruptcy protection can use Chapter 11 to get back on their feet financially by completing a repayment plan over an extended period of time. Chapter 11 can sometimes be a more advantageous alternative than Chapter 13, […]
When Is a “Chapter 22” an Effective Remedy for a Company?
The informal term “Chapter 22” is used to describe a second Chapter 11 filing after a company falls short of emerging successfully from the first one. This can happen for various reasons, often related to unfulfillment of assumptions or expectations underlying the original Chapter 11 plan. Unlike other types of bankruptcy, there is usually no […]
Subchapter V Can Protect Personal Assets During a Small Business Wind Down
Small business is a critical component of the U.S. economy. However, starting a business is risky and many ventures fail. Startups and even businesses of some duration may be partially capitalized by the owners’ personal funds and debt obligations. When the business ceases to operate, the owners can be left with crushing debt burdens. Fortunately, […]
Preparing for a Successful Chapter 11 Bankruptcy
A Chapter 11 bankruptcy — also called restructuring or reorganization — is filed by a company that cannot pay outstanding debts from its current revenue or existing assets. Rather than closing the doors, the company can remain in business by restructuring its debts so that it will ultimately become economically viable. Outstanding debts are repaid, […]
Weighing Chapter 11 and Chapter 13 as Bankruptcy Options for Small Business Owners
A small business depends on its goodwill and name recognition, which are viable assets only if the business stays in operation. If your company is having financial difficulty but could turn the corner to profitability with some help, restructuring your debt through bankruptcy could be your best option. Depending on your circumstances, a Chapter 11 […]
Deciding What Type of Business Bankruptcy to File
Opening a small business is exciting but risky. According to the Bureau of Labor Statistics, about 20 percent of small businesses fail in the first year. By the end of year five, 50 percent have failed. And after 10 years, 70 percent have gone out of business. For many small business owners, seeking bankruptcy protection […]
