What is Chapter 11 bankruptcy?

Chapter 11 bankruptcy is a form of reorganization available to individuals, corporations and partnerships that has no debt limits.  It is the usual choice for large businesses seeking to restructure their debt.  Businesses that file for Chapter 11 are able to continue with almost normal operation as a debtor-in-possession of their property.

Businesses can file Chapter 11 bankruptcy for a variety of reasons, such as stopping a foreclosure, renegotiating their debts, and terminating a burdensome lease.  It can also be used by individuals who don’t satisfy the Chapter 13 requirements as a way to restructure mortgages, pay taxes, and eliminate unsecured debt.

The motivation to file a Chapter 11 petition is generally different than the motivation for filing a Chapter 7 petition. In a Chapter 11 proceeding the business is often profitable, or could become profitable, if it could simply dispose of unproductive assets, renegotiate contracts and debt obligations with onerous terms, or settle actual or impending judgments in lawsuits that would jeopardize the ability of the business to continue operating.

The decision to file a Chapter 11 petition is only the beginning of the legal process. It is not the solution. There are no guarantees that a business will successfully reorganize.

To successfully emerge from Chapter 11, it is vital to have the right attorney beside you to help you make the right decisions as the failure rate for Chapter 11 cases is high.

For more information about Chapter 11 bankruptcy, call the experts at Heupel Law, (720) 319-8900.