Representing NJ businesses facing Chapter 11 bankruptcy
When a business owner faces mounting bills, overwhelming debt, and an uncertain future, it may be time to consider filing for bankruptcy to help the company get back on track. Under the bankruptcy code, there are options available to businesses like there are for individuals. One option is for Chapter 7, which liquidates the business and closes its doors, laying off the staff. Another option is Chapter 11 bankruptcy. This option is good for businesses that cannot satisfy debts, but retains a value greater than the sum of its assets. Chapter 11 is a reorganizing plan with a goal to increase net flow, keeping the doors open and the staff employed. In the most fortunate circumstances, the business can become a profitable entity again. Underwood & Micklin works with small and large businesses across New Jersey. If you need an effective law firm to guide you through Chapter 11 bankruptcy, contact our firm for a consultation.
Chapter 11 bankruptcy process
The first thing a business owner should do is to contact an experienced bankruptcy attorney that can explore any way to avoid bankruptcy, including debt restructuring and loss mitigation. Our firm can help you make an educated decision that is best for you, the business owner, and the business you have worked so hard for.
If Chapter 11 is right for you, the first step is to file a bankruptcy petition. With our help, the petition should include a financial statement, a list of assets, a list of liabilities, and a statement of any outstanding contracts or leases.
The automatic stay
Filing for bankruptcy triggers an automatic stay. An automatic stay prohibits creditors and debt collectors from pursuing your debts. They are not allowed to contact your business, providing you a bit of breathing room to get things in order. The automatic stay provides some space while you focus on your reorganization plan.
The reorganization plan
You and your attorney will develop a reorganization plan that keeps the business operating on a long-term basis. Usually, this plan will restructure debt by canceling executory contracts or leases to reduce overhead. With a reorganization plan, a business continues to operate and any profit generated is used to pay off debt.
Meeting of creditors
Soon after the filing and submission of the reorganization plan, creditors will have an opportunity to meet with the attorney and business owner to get a clear picture of the business’s everyday functionality and finances. They may ask some limited questions to see if the Chapter 11 bankruptcy reorganization plan can be opposed. They will use much of this information to develop their own plan.
Getting the plan approved
The plan must be approved by the bankruptcy court, which can be a complicated matter. If any creditor disputes the plan, they can provide a plan of their own. The bankruptcy court has the final say in the matter. Even if a large group of creditors oppose the plan, if the bankruptcy court believes that it is in the best interests of the business and meets the legal standard, it can be approved. If the creditors’ plan is more feasible, the court may judge in favor of that plan.
The confirmation hearing
The last step is to get the plan confirmed through the bankruptcy court hearing. If there are no disputes, the hearing shouldn’t be difficult. If there are significant objections to the debtor’s plan and others have been submitted, the hearing will decide the future of the company. If the court rejects all plans, the case could be converted to Chapter 7, liquidating the business and closing the doors of the business.
Contact an experienced Chapter 11 bankruptcy attorney
Underwood & Micklin has over 20 years of experience helping debtors acquire relief through the bankruptcy code. Our firm recognizes the need to continue your life goals and keep those doors open. If you are facing significant financial problems and need effective legal services and knowledgeable advice on the matter of bankruptcy, contact Underwood & Micklin for a consultation to discuss the best course of action for your business.