Chapter 11

Consumer Chapter 11 bankruptcy cases constitute less than 1% of all bankruptcies filed.

This chapter of bankruptcy is the most complex and time-consuming bankruptcy proceeding and is typically available to corporations, partnerships or individuals whose debts exceed the limits under Chapter 13.

When to file Under Chapter 11

  1. A Chapter 11 case is another type of reorganization proceeding, similar to a Chapter 13 case. This chapter of bankruptcies constitutes less than 1% of all bankruptcies filed. But account for as much as 90% of the time expended by the bankruptcy court in each jurisdiction.

    This fact illustrates the complexity of this chapter case.

  2. The intent of this chapter debtor is to successfully reorganize its affairs. In order to repay debt, retain assets and remain in business. These goals are accomplished by filing a proposed plan of reorganization and obtaining its confirmation, much like the Chapter 13 proceeding.

    Despite its complexities, this chapter works for small debtors as well as large debtors.

    Chapter 11 debtors can operate without court approval.

  3. Businesses in serious financial condition may continue to operate without danger of immediate closure by any of its creditors. This breathing spell theoretically provides the debtor with an opportunity to attempt to reorganize its financial affairs.

    The practical effect of the Chapter 11 debtor-in-possession rules is to make the debtor an involuntary partner with its creditors. Cooperation, disclosure and compliance by all parties involved increases the chances for a successful reorganization of debts in this chapter proceeding.

Businesses have also struggled with the economic downturn. Unable to meet tax, payroll or other obligations, and sometimes fall too far behind to catch up without having to terminate operations. Chapter 11 Bankruptcy may be the best option for relief. Struggling businesses with unpaid loans or other debt, that believe their business will succeed in the future should consider this chapter as a solution.
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