Chapter 11 Bankruptcy: Questions And Answers

In this article, you can discover:

• It is possible for the court to force a secured creditor to reduce or change the loan plan or due date in a Chapter 11 bankruptcy case.
• The timing for filing a plan of reorganization in a Chapter 11 bankruptcy case is set by the bankruptcy code and the court.
• It is usually beneficial for the debtor to file a plan of reorganization as soon as possible after the bankruptcy case is filed, but there are exceptions to this rule.
• The goal of filing for Chapter 11 bankruptcy is typically to allow the business to continue operating as usual, but there are some limitations to conside

Can The Court Force A Secured Creditor To Reduce Or Change The Loan Plan In A Chapter 11?

In a Chapter 11 bankruptcy case, it is possible for the court to force a secured creditor to reduce or change the loan plan or due date in a restructuring plan. This is particularly useful for debtors who own property that is not their primary residence, such as a rental property. In these cases, the court can authorize the rewriting of the loan at a more favorable interest rate and restructuring the repayment term to stretch it out over a longer period of time.

This can be a significant advantage for debtors with substantial mortgage arrears. For example, instead of continuing to make regular mortgage payments and trying to pay off the arrears over 15 years, the arrears can be capitalized and the entire loan can be rewritten over a longer period, such as 30 years. This allows for better cash flow and increases the feasibility of the restructuring plan.

How Long Does A Chapter 11 Debtor Have To Prepare And File A Plan Of Reorganization?

The timing for filing a plan of reorganization in a Chapter 11 bankruptcy case is set in part by the bankruptcy code and in part by the court. If the debtor is a small business, the bankruptcy code may specify a deadline for filing the plan. However, the court may also set its own deadline for the plan to be filed.

It is often beneficial for the debtor to file a plan of reorganization as soon as possible after the bankruptcy case is filed. This is because time is often not on the debtor’s side, as creditors may become frustrated and seek legal counsel or file motions that can complicate the case. However, there are exceptions to this rule.

If the debtor is in a struggling business but there are signs of improvement, it may not be feasible to file a plan at the time of the bankruptcy filing due to insufficient revenue. In this case, it may be more strategic to defer the filing of the plan and see if the business’s revenue increases or expenses can be controlled through disposable income proceedings before submitting a feasible plan.

Can I Run Business As Usual While In A Chapter 11 Bankruptcy?

In most cases, the goal of filing for Chapter 11 bankruptcy is to allow the business to continue operating as usual. However, there are some limitations to consider. Until the case is confirmed, there can be no payments to vendors or creditors for any pre-petition debt. This allows the debtor some breathing room and time to focus on the business rather than worrying about meeting daily, weekly, or monthly debt obligations.

While the business is expected to continue operating as usual, creditors may be more hesitant to do business with the company until the bankruptcy case is confirmed. Suppose the business presents a plan that is a good-faith effort to restructure its debt and continue operations. In that case, creditors may be more likely to support the plan and continue doing business with the company going forward.

So How Do I Find The Best Chapter 11 Bankruptcy Attorney?

When searching for the best Chapter 11 bankruptcy attorney, it is essential to prioritize experience. In any given community, there are only a few attorneys who have the knowledge and skill to successfully handle Chapter 11 cases. These are the attorneys who appear routinely on the court calendar and have a track record of success. It is important to avoid attorneys who offer low fees but have little experience, as these cases are more likely to fail.

In addition to experience, it is also important to consider cost when selecting a Chapter 11 bankruptcy attorney. Chapter 11 cases can be expensive, and it is important to find an attorney who offers reasonable rates. Some larger law firms in major cities may charge higher fees, which may not be affordable for smaller debtors or businesses. It is important to find an experienced attorney who offers competitive rates and is a good fit for your specific needs.

With the guidance of a skilled attorney for Bankruptcy Law Cases, you can have the peace of mind that comes with knowing that we’ll make it look easy. For more information on Bankruptcy Law in California, an initial consultation is your next best step.