Chapter 11 Bankruptcy Attorney in Media, PA
LEARN MORE ON CHAPTER 11 BANKRUPTCY IN MEDIA, PA; RISING SUN, MD & STATEN ISLAND, NY
Chapter 11 Bankruptcy Attorney - Filing Bankruptcy For Your Business
Chapter 11 is a type of bankruptcy that is available to both individuals and businesses, but is overwhelmingly utilized by businesses that are unable to service their debts or pay their creditors. Chapter 11 is an alternative to Chapter 7 bankruptcy that allows a business to reorganize its debts so it can keep operating, thereby maintaining its potential profitability. In Chapter 7, on the other hand, all of a business’s assets are liquidated and the proceeds are used to pay creditors, causing it to cease to exist.
Purpose Of Chapter 11 Bankruptcy
Many businesses file for Chapter 11 when the owner believes that the value of the business as an operation is greater than the amount of money that could be obtained through liquidation. Chapter 11 allows the business to reorganize its debts in a way that creditors will receive what they are owed while the business continues to operate. The goal when filing for Chapter 11 is to give the business an opportunity to emerge from bankruptcy as a profitable entity.
What Happens When A Business Files Chapter 11 Bankruptcy?
When a business files for Chapter 11 bankruptcy, it can:
- Recover its assets
- Repay part of its debts and discharge whatever is left over
- Reject unprofitable contracts and leases
- Rescale and restructure operations to get back to profitability
What Happens When A Business Files Chapter 11 Bankruptcy?
If you are considering filing for Chapter 11 bankruptcy, the first thing you should do is speak with an experienced attorney immediately. If your business is more valuable as an operating business than as the sum of its parts, Chapter 11 bankruptcy may be a great option for you. Call The Law Offices of Michael Alan Siddons, Esquire at 610-255-7500 for more information. Our law firm is able to handle your Chapter 11 bankruptcy case in Media, PA; Rising Sun, MD & Staten Island, NY surrounding areas.
6 Steps When Filing For Bankruptcy
Filing for Chapter 11 bankruptcy is a complicated process involving a number of steps. For this reason, it is highly advisable to go through the process with an experienced chapter 11 attorney. Some of the steps that are required for a business to obtain the protections afforded by Chapter 11 bankruptcy include the following:
Step 1
Making the decision to file for bankruptcy.
Step 2
Retaining an attorney, and consulting with that attorney about whether Chapter 11 is the right decision in your case.
Step 3
Filing for bankruptcy, which involves filing a petition with the court and submitting significant supporting documentation about your financial situation and history
Step 4
Managing your business during Chapter 11 bankruptcy.
Step 5
Consulting with priority creditors to determine how you will reorganize the business.
Step 6
Creating a reorganization plan, which outlines how the business will be restored to profitability and how creditors will be repaid.
After all of these steps are completed and the bankruptcy court determines that your plan is reasonable and has been created in good faith, it will usually confirm the plan. At this point, any debts that existed prior to the plan being confirmed will be discharged and your business will be required to repay its creditors according to the terms of the repayment plan.
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DEBT DOESN'T NEED TO CONTROL YOUR BUSINESS
CHAPTER 11 BANKRUPTCY BASICS FOR THE MEDIA, PA; RISING SUN, MD & STATEN ISLAND, NY AREA
How Does Chapter 11 Bankruptcy Work?
When a company files for Chapter 11, it is required to develop a plan through which certain assets are retained, some are sold, and some debt is refinancedin order to return the company to profitability. Once the bankruptcy is filed, the business that filed becomes known as a “debtor in possession,” which means that it is still in control of the business and its assets while the Chapter 11 proceedings are happening. During this period, the debtor in possession is required to submit a monthly report regarding the business’s operating expenses and monthly income to a bankruptcy trustee appointed by the court.
LEARN MORE ABOUT THE PROTECTIONS OF THE AUTOMATIC STAY
Prevent Collections On Your Business
One of the most immediate benefits of filing for Chapter 11 bankruptcy is the automatic stay, which is an injunction that automatically takes effect when a bankruptcy is filed. It prevents creditors from engaging in any type of collection activity while the Chapter 11 bankruptcy is pending. As a result, many businesses (and individuals) use bankruptcy as a tool to stop impending collection activities that could have devastating results, such as foreclosure or repossession of assets. While the automatic stay is in place, creditors may not engage in any type of collection activity– in addition to being barred from foreclosing on or repossessing assets, they may not make calls, send letters, initiate a lawsuit, or disconnect utilities. In many cases, the protections afforded by the automatic stay are what allow a business to continue operating while it works out a reorganization plan that will restore it to profitability.
Types Of Debt In Chapter 11 Cases In Media, Pa; Rising Sun, Md & Staten Island, Ny
The vast majority of Chapter 11 cases involve restructuring a variety of types of debt, including unsecured debt, secured debt, priority tax debt, and commercial leases. Again, the point of restructuring these debts is to protect business assets and continue operations while creating a plan to pay back creditors.
UNSECURED DEBTS
Many businesses carry significant amounts of unsecured debts in the form of company credit cards or unsecured loans that were incurred to meet operating or startup costs. Unfortunately, these kinds of debts can also stifle growth and make reaching profitability difficult. Chapter 11 bankruptcy allows businesses to pay these debts throughout the Chapter 11 case or in a lump sum at the conclusion of the case while being protected from collection activity.
SECURED DEBTS
Secured debts involve a piece of property acting as collateral for the debt. For example, a mortgage is secured by the real estate the mortgage was used for, just as vehicles act as collateral for vehicle loans. Many businesses have secured debt for their equipment and without bankruptcy protections, lenders could seize the collateral if the business stops making regular payments. Chapter 11 bankruptcy allows businesses to pay towards the actual value of the collateral as opposed to the amount of debt that is owed.
PRIORITY TAX DEBT
As any business owner is well-aware, business can incur significant tax liability in a relatively short amount of time. In cases in which a business has past-due taxes in the form of income taxes, property taxes, or payroll taxes, Chapter 11 allows the business to pay these off over the course of the Chapter 11 plan while staying in business.
COMMERCIAL LEASES
A commercial lease can often be one of a business's largest regular expenditures. Chapter 11 allows a business to reject the lease if it can be shown that it will be financially beneficial to the business and its creditors. For more information about debtor in possession status and its ramifications, you should call an attorney today.
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WHAT TO LOOK FOR IN A CHAPTER 11 BANKRUPTCY ATTORNEY
Get The Most Out Of Filing Chapter 11 Bankruptcy
Many business owners who are considering Chapter 11 have never been in this situation before and are uncertain as to how to even begin finding a lawyer. Here are some of the qualifications that you should consider when choosing an attorney to represent your business in a Chapter 11 case:
Experience
Chapter 11 bankruptcy is a complicated matter and many practicing attorneys have made it through law school and passed the bar exam without learning the first thing about bankruptcy. As a result, it is important to not only look for an attorney who has been practicing law for some time but also one that has represented businesses in Chapter 11 proceedings in the past.
A Track Record of Success
When choosing an attorney, it is important to consider whether your lawyer has successfully represented clients in a similar situation to yours. This can be difficult when choosing a bankruptcy attorney, because there are generally not clear winners and losers in a bankruptcy case. When choosing an attorney for a Chapter 11 business bankruptcy, it is advisable to look to his or her past clients’ outcomes after bankruptcy. This will give you a good idea as to how effectively the repayment plan was structured.
Personal style
It is important to remember that you may be working with your Chapter 11 attorney for a number of years. As a result, it is critical to choose an attorney whose business and communication style suits your preferences. Do you like to discuss strategy or would you like to be advised as to how to proceed? What are your communication preferences? Answers to questions like these will help you choose a lawyer that will best suit your needs.
Need More Information About A Business Bankruptcy?
Call Mike today for a free consultation to discuss your bankruptcy options.
If you are considering filing for Chapter 11 to allow you to keep operating your business, the first thing you should do is hire an attorney for debt reorganization. As one of the best debt reorganization attorneys, Michael Siddons has the skill and experience required to negotiate a reorganization plan with favorable terms and ensure that your legal rights are protected. Mike is licensed to practice law in the states of New Jersey, Pennsylvania, and Maryland and was named one of the “10 Best Bankruptcy Attorneys in Pennsylvania for Client Satisfaction” by the American Institute of Bankruptcy Attorneys in 2014. To schedule a consultation with Mike, call our office today at 610-255-7500 or send us an email through our online contact form.