Taking the Steps to a Successful Chapter 11 Reorganization
Corporations, small businesses and certain individuals are entitled to a reprieve from creditors through Chapter 11 bankruptcy. While this may be the best hope to keep an ailing business afloat, many Chapter 11 plans fail because they are unrealistic.
The David F. Cannon law firm has successfully shepherded a number of clients through Chapter 11 reorganization — and we have helped other clients avoid an expensive and ill-advised Chapter 11. Our board-certified bankruptcy attorney can provide the skilled and honest assessment of whether or not your business can be salvaged.
Our Nashville business bankruptcy lawyers have represented doctors and other professionals, construction contractors and handymen, mom-and-pop enterprises and other business owners across Middle Tennessee. Contact us today to discuss Chapter 11 bankruptcy.
We also handle Chapter 11 for individuals whose debts are too high for Chapter 13. We can explain how the process differs from Chapter 11 protection for businesses.
The Process for Securing Chapter 11 Relief
Chapter 11 analysis — Turning a business around in Chapter 11 is not about working harder. It is about taking a hard, objective look at the profit and loss statement and other realities of the business. We have had success with Chapter 11s by selecting good cases up front. Do you intend to keep the business or is bankruptcy merely a delay tactic? What are the revenue projections and what can be done to generate more income? Do the debts belong to the business entity or to the individual?
- Filing for bankruptcy — If we determine that you have a viable business, we will submit a preliminary business plan with the U.S. Bankruptcy Court based on your assets, liabilities, revenues and expenses. The filing must list all creditors, including the top 20 unsecured creditors. On the date that you file, the automatic stay of bankruptcy immediately halts collection efforts and legal actions, including property liens, bank account liens or repossession of business assets.
- Convincing the trustee — After the initial petition is filed, a number of detailed schedules must be provided regarding property, exemptions and categories of debts. Within a few weeks of filing for Chapter 11 protection, you will meet with the bankruptcy trustee assigned to your case. The trustee will fine-tune the payment plan based on projected revenues and offsetting expenses. We excel at providing a detailed plan for reorganizing and emerging from bankruptcy as a stronger, streamlined business.
- Convincing the creditors — A majority of creditors must vote to approve your plan, so the prorated repayment cannot be too thin. In simplest terms, the formula must pay creditors more than they would receive if your business were simply liquidated in a Chapter 7.
- Concessions to shareholders — Corporate shareholders can hold up a Chapter 11 if they object to the plan. Under the absolute priority rule, shareholders take a back seat in bankruptcy to non-dischargeable debts, secured debts and unsecured debts. A special provision called the new value exception gives priority status to shareholders who invest $5,000 or more of their own money to help keep the business afloat. They recoup the money if the business turns a profit or move ahead of other creditors if the business folds.
- Completing the plan — The timeline for a Chapter 11 reorganization varies, depending on the amount of debt, the proposed plan, and whether there are adversary proceedings (preference payments, fraud, relief from stay, etc.). When all fixed monthly payments are made for the agreed upon term of the plan, and other criteria are satisfied, any remaining debts to those creditors are discharged.
Chapter 11 Relief Lawyer · Murfreesboro, Nashville and Surrounding Tennessee
David F. Cannon is certified as a Consumer Bankruptcy Specialist by The American Board of Certification and The Tennessee Commission on Continuing Legal Education and Specialization. He can walk you through the steps of Chapter 11 and help you make an informed choice about committing to reorganization or cutting your losses.
Call 615-800-3725, toll free at 877-696-8680, or e-mail our law office today to arrange a confidential consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
