A Bankruptcy Lawyer in Philadelphia Discusses Chapter 11 Business Bankruptcy
One of the most common questions a bankruptcy lawyer in Philadelphia is likely to hear from small businesses struggling with debt is “Can I file for Chapter 11 or Chapter 13 bankruptcy?” In some cases, either form of bankruptcy may be an option.
Last month we discussed Chapter 13 business bankruptcy. Some businesses are unable to file for Chapter 13 and must choose Chapter 11. These companies may have too much unsecured debt or they may be corporations, partnerships, or limited liability companies (LLCs) Bankruptcy law is complicated, and an experienced bankruptcy lawyer in Philadelphia, such as at Alfred Abel Law Offices, can give you advice relevant to your specific situation.
Understanding Chapter 11 Business Bankruptcy
- Restrictions on filing.
As previously stated, Chapter 13 is only an option for individuals and sole-proprietorships. Corporations, partnerships, and LLCs must file for Chapter 11 instead. The only exception would be a husband-and-wife partnership filing jointly.
Currently, the Chapter 13 restrictions on the maximum amount of debt are:
- Secured debts must be lower than $1,184,200
- Unsecured debts must be less than $394,725.
- What can Chapter 11 Accomplish?
Your company can continue operations while restructuring is underway. A debtor company is granted an automatic stay which stops all existing litigation against the debtor and any efforts to collect debts that already exist on the filing date. If the case is successful, the reorganization will allow the company to reorganize and remain in business.
- Time and costs.
Chapter 11 takes more time than Chapter 13. Most of the restructuring is decided upon well before you file your plan, but during the process, many negotiations are held to gain approval by creditors. Due to the additional time required, the cost can be much higher due to fees for a bankruptcy lawyer in Philadelphia; though even the filing fee is higher for Chapter 11 bankruptcies.
- Court Oversight
Unlike Chapter 13 bankruptcy cases, Chapter 11 cases have no assigned court trustee. The debtor has up to four months to propose a reorganization plan. With cause, they may get an extension, but if no plan has been approved by that time, creditors may begin presenting their own plans. Though there is no trustee, the court does have control over and must approve major business decisions, such as:
- Retention of attorneys
- Sale of assets other than retail property sold in the course of doing business
- Expansion of business (or shutting down the business)
- Entering into contracts or agreements
Call Alfred Abel Law Offices for a Trusted Bankruptcy Lawyer in Philadelphia
Though Chapter 11 is costly, this type of bankruptcy is the only option for some companies to stay in business, and therefore may be the right choice. To determine whether your company should undertake a Chapter 11 Bankruptcy or file Chapter 7 instead, seek the advice of a professional and experienced Bankruptcy Lawyer in Philadelphia. Contact Alfred Abel Law Offices today to schedule an appointment.