COMMENCEMENT OF THE CASE – Do you Need Chapter 11 Help Today?
The chapter 11 is a formal process that permits parties in interest to resolve a debtor’s financial problems through a plan of reorganization. This procedure may involve one or more entities or individuals. The goal is to allow the troubled debtor to reorganize rather than liquidate thereby preserve. the value of the going concern rather selling off pieces in a fire sale. The center piece of this process is the plan of reorganization. This plan when confirmed becomes a contract between the parties in interest including the debtor, creditors and equity holders. This plan involves a reorganization of assets principally as debt. As a practical matter the plan of reorganization proposes a process that is about how to spread around the pain for a business that cannot repay its debts in full.
Chapter 11 Help
Do you Need Chapter 11 or 13 Help Today?
The Debtor seeks relief from the debt that it cannot repay, and the creditors seek to collect the debt.
The central idea is that the debtor is more valuable as a going concern and the chapter 11 is utilized to accomplish the preservation of this going concern. The plan will be confirmed if and when creditors are satisfied that they will receive as much as they would in a liquidation.
This chapter is most frequently used by business entities it is also available to individuals not engaged in business, this most normally occurs where the individual’s debts exceed the statutory limits for a chapter 13 filing although it is not limited to this situation.
THE PETITION
The process begins with the filing of a petition containing specific information about the debtor. This filing creates a fictitious estate called the bankrupt estate which includes all equitable and legal interests of the debtor as of the commencement of the case.
THE PLAN
The plan separates the claims into classes, designates those that will receive less than they claim(impaired claims) and those that will receive their full claim although this may be in installments. Impaired claims vote, unimpaired claims do not vote. All members of a class receive the same treatment.
THE DISCLOSUE STATEMENT
The proponent of the plan submits a disclosure statement that allows all affected parties to make an informed decision as to whether to vote for the plan. A class of creditors or interest holders is deemed to accept the plan if the holders of at least two-thirds in amount and one-half in number vote in favor of the plan. Classes not impaired are presumed to have accepted the plan.
THE BEST INTERESTS OF CREDITOR TEST
The plan must provide as much as the creditors would receive in a liquidation, the best interests of creditors test 1129(a)(7)(A) of the code.
THE FEASIBILITY TEST
The plan must be workable, the feasibility test but success need not be guaranteed. In order show a reasonable probability of success the debtor may compare the debtors projected future expenses to the debtor’s actual performance while considering the capability of management, capital resources and reasonably anticipated future liquidity.
NON-CONSENSUAL CONFIRMATION (CRAM DOWN)
If the debtor can show that the plan does not discriminate unfairly and is fair and equitable with respect to each class of claims or interests that is impaired and has not accepted the plan.
THE ABSOLUTE PRIORITY RULE AND THE NEW VALUE EXCEPTION
1129(b)(2)(B)(ii) provides that If a debtor is unable to pay its creditors in full the owner(s) may not retain his/her/it/their interests unless they contribute new value to the bankrupt estate. In order to take advantage of this exception the equity holders must offer value that is new.
- Substantial chapter 11 help
- Money or money’s worth
- Necessary for a successful reorganization
- Reasonably equivalent to the value or interest received.
The absolute priority rule as amended by BAPCPA to provide for an exception in the Chapter 11 case of an individual debtor stating that “except that in a case in which the debtor is an individual, the debtor may retain property included in t he estate under section 1115, subject to the requirements of subsection (a)(14 )of this section” case law has dealt with the resulting difficulty of reconciling 1129(b)92)(B) and section 1115.
You could be debt free in as little as 3 months!