Chapter 11 is a type of Bankruptcy typically filed by a commercial enterprise or business that desires to continue operating a business and repay creditors through a court approved plan of reorganization. You continue to operate your business under supervision of the Bankruptcy court and the Bankruptcy Administrator.
Individuals who have debt that exceeds the debt limit allowed for a Chapter 13 may seek to file a Chapter 11 and there is a new provision for Small Businesses to seek protection under Chapter 11 through Subchapter V (“Subchapter 5”) that operates similar to a Chapter 13. The new provision is called the Small Business Reorganization Act. Click here to learn more about how Subchapter V can help you.
The goal of a Chapter 11 is to propose a plan to reorganize your business and restructure your operations to return to profitability. One example of this may be a company with several locations that needs to reject a lease and close an underperforming location in order to save the profitable locations. A Chapter 11 plan will also allow you to establish new terms of payment and discharge unsecured debt.
Due to the complexities of Chapter 11, our firm does charge for an initial consultation in order to analyze the financial situation of an individual or business who is considering filing for Chapter 11.