If your corporation, partnership or sole proprietorship is struggling with substantial debt, Pinks, Lipshie, White & Nemeth can help guide your through the Chapter 11 bankruptcy process to keep your business viable while you develop fresh strategies for future growth. Often referred to as “reorganization bankruptcy,” Chapter 11 permits your business to operate while you pay creditors a fraction of what you owe under a court-ordered payment plan. With 250 years of combined experience, our attorneys can help you file Chapter 11 quickly and efficiently. Once your business has filed for bankruptcy, creditors must immediately stop collections efforts, including harassing letters and phone calls.
A Chapter 11 bankruptcy case can take anywhere from a few months to two years to resolve. During that time, owners continue to operate the business as “debtors in possession,” unless the court detects fraud, dishonesty, incompetence, and gross mismanagement that necessitate the appointment of a trustee. The bankruptcy court or the trustee makes major decisions for the debtor while the business remains in bankruptcy. Such matters might include:
After filing, the debtor enjoys an exclusivity period, which the court can extend or shorten, during which only the debtor can propose a restructuring plan for addressing the debt. When the exclusivity period expires, the creditor committee can propose a competing plan. Creditors generally look to secure a greater guarantee of repayment than the debtor is offering, and may request a liquidation of assets and a downsizing of operations to get a higher initial payment on the debt. Although creditors have a voice in approving or rejecting a Chapter 11 plan, the court has the final say, and decides to confirm a plan based on requirements that include:
Confirmation of the reorganization plan discharges your business debts that were acquired prior to the plan’s confirmation. Your business is bound by the terms of the reorganization plan, which forms new contractual terms that supersede all contracts entered into prior to your bankruptcy discharge. Since the future success of your business depends greatly on the quality of your Chapter 11 plan, you should seek reliable advice from an experience business bankruptcy attorney.
The owner of a sole proprietorship does not have an identity separate from the business, so the bankruptcy court does not distinguish between the business’s assets and the owner’s personal assets. The filing of Chapter 11 bankruptcy places the owner’s assets at risk. Pinks, Lipshie, White & Nemeth in Hauppauge can develop successful strategies to protect your personal assets from your business’s creditors, while putting your business in the best possible position to succeed going forward. The owners of a corporation filing a Chapter 11 do not risk their personal assets, except for their investments in the corporation. However, certain partners might find their personal assets at risk. I work for resolutions that advance the business’s best interests while protecting corporate stockholders or partners of the business.
Pinks, Lipshie, White & Nemeth assists with business bankruptcies throughout New York. Call 631-234-4400 or contact us online to schedule your bankruptcy consultation.