Chapter 11

What is Chapter 11 Bankruptcy?

Chapter 11 is a reorganization for a business or higher income individuals or couples. Debts are restructured, minimized, or in some cases eliminated completely.

Who typically files Chapter 11?

Companies or higher income individuals that can identify specific contracts or leases that need to be terminated or renegotiated for business continuation may choose to file Chapter 11. Companies that can pay current operating expenses, but are servicing substantial debt that is past due may also be good candidates for Chapter 11..

What is the Automatic Stay?

When a Chapter 11 bankruptcy case is filed, an "automatic stay" is entered. The stay stops garnishments, harassing phone calls, collections, foreclosures, and lawsuits. However, if you had a case dismissed within the past year, the "automatic stay" may not apply.

What Happens After Filing Chapter 11?

Upon filing, the Debtor is required to pay all on-going normal operating expenses. Old debt is temporarily put "on-hold". Monthly operating reports are filed with the Court to establish the company's ability to pay its expenses. The debtor then files a "disclosure statement" which details the history of the company, the facts that led to the filing and submits a plan of reorganization. Creditors are given an opportunity to review and vote on the plan. Creditor approval is not required, but it is preferred. Shortly after the Court approves the plan, the case is removed from direct Court supervision and the debtor continues its operations completing the plan of reorganization over time.

What is a Chapter 11 Plan?

The "Chapter 11" plan refers to the amount the company will pay to the creditors, the percentage each creditor will receive, the length of the payments and the cancellation of any purchase contracts or leases. The amount paid each month is based on the company's ability to pay, whether the debt is secured or unsecured and liquidation value of the company. Creditors vote to accept or reject the plan. Creating a viable plan is crucial to the company's long-term success and will require substantial analysis and consideration.

For an analysis of whether Chapter 11 is right for you or your business, please contact our office for an appointment.

Have questions or need immediate help with a legal matter? We can help you.

Bankruptcy Courts

Atlanta Federal Court
75 Ted Turner Drive, SW
Atlanta, GA 30303
Directions & Information

Rome Federal Court
600 East 1st Street
Rome, GA 30161
Directions & Information

Gainesville Federal Court
121 Spring Street SE
Gainesville, GA 30501
Directions & Information

Newnan Federal Court
18 Greenville Street
Newnan, GA 30263
Directions & Information