Los Angeles Chapter 11 Bankruptcy Attorney
Businesses facing insurmountable financial difficulties have the option of filing for business bankruptcy protection under Chapter 11 bankruptcy, also known as “reorganization” bankruptcy. Chapter 11 bankruptcy offers a reasonable debt relief solution for businesses (small and large, including corporations and partnerships) and individuals with significant debts and assets who are not eligible for Chapter 13 bankruptcy due to the strict debt limitations associated with that chapter. If your business is in debt and you want to repay your creditors while continuing business operations, or if you are an individual struggling with overwhelming debt and you have regular income, but you do not qualify for Chapter 13 bankruptcy, you may be able to reorganize your debts and develop a manageable plan to repay your creditors by filing for Chapter 11 bankruptcy. Contact our experienced Los Angeles bankruptcy attorneys at Resnick Hayes Moradi LLP as soon as possible to find out how declaring Chapter 11 bankruptcy could help you repay your debts and get your business back on track.
Professional Los Angeles Bankruptcy Attorneys
There are plenty of reasons why hiring a knowledgeable bankruptcy attorney is a good idea when seeking debt relief through Chapter 11 bankruptcy. A good bankruptcy attorney will represent your best interests throughout the entire bankruptcy process, from filing a bankruptcy petition and creating a plan of reorganization, to negotiating with creditors and fighting creditor motions. Having an experienced bankruptcy attorney in your corner can also significantly improve your chances of presenting a well-developed reorganization plan and having the plan confirmed in the early stages so that your bankruptcy case isn’t unnecessarily delayed or dismissed. If your Los Angeles bankruptcy case is dismissed, you may have to wait 180 days before you can file again, which could put you further in debt and reduce your chances of obtaining the help you need to get your business finances back where they belong. Our Los Angeles bankruptcy attorneys at Resnik Hayes Moradi LLP understand that all businesses are different, with unique financial situations that require special handling, and we can provide you with reputable bankruptcy advice that is tailored to your specific case. Contact our Los Angeles bankruptcy attorneys today to schedule a free initial consultation.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy, also known as debt reorganization bankruptcy, is typically used by corporations or partnerships to work out a plan to reorganize the business’ debts and pay off its creditors, usually while securing its assets. Chapter 11 bankruptcy was originally intended for businesses, but individuals can also file under this chapter. In fact, Chapter 11 bankruptcy may be the best option for individual debtors who don’t meet the debt limitations for Chapter 13 and who don’t want to lose their home. Because corporations and partnerships are not able to file Chapter 13 bankruptcy in Los Angeles, many choose Chapter 11 bankruptcy for the advantages it offers over Chapter 7 bankruptcy, including the advantage of not having to terminate business operations or liquidate business assets to repay creditors.
If you file for bankruptcy under Chapter 11, you will be required to propose a plan to reorganize your debts and pay back the money you owe to your creditors, much like Chapter 13 bankruptcy. Chapter 11 bankruptcy offers more flexibility and options than other bankruptcy chapters, but there are certain factors that can make Chapter 11 bankruptcy more complicated, confusing and costly. For instance, unlike a Chapter 13 case, creditors in a Chapter 11 case have the opportunity to vote for or against the proposed reorganization plan, based on whether they agree with the conditions of the plan and what it means for them and the money they are owed. Under Chapter 11 reorganization bankruptcy, you may be able to avoid liquidating your business assets and settle your business debts for a fraction of what you owe, but before moving forward with a bankruptcy petition, you should first enlist the help of a knowledgeable Los Angeles bankruptcy attorney.
Eligibility for Chapter 11 Bankruptcy
Chapter 11 bankruptcy was designed with business debtors in mind because it allows the business owner to maintain control over the business and continue operations throughout the course of the bankruptcy case, unlike Chapter 7 bankruptcy. However, individual debtors may also be eligible for Chapter 11 bankruptcy if they exceed the strict debt limits associated with Chapter 13 bankruptcy, which as of 2019, is $419,275 for unsecured debts and $1,257,850 for secured debts. Chapter 11 bankruptcy cases require a great deal of work on the part of the debtor and his or her bankruptcy attorney (i.e. business owners must submit monthly profit and loss statements documenting the business’ income, income sources and expenses) and if the debtor fails to follow the proper procedures required by the court and the rules set forth by the bankruptcy code, the case could be converted to a Chapter 7 bankruptcy, in which case the business could be liquidated to pay back the business owner’s creditors.
Why Choose Chapter 11 Bankruptcy?
Filing Chapter 11 bankruptcy can be a lengthy and expensive process, but this bankruptcy chapter offers a great deal of flexibility and can be an excellent debt-relief solution for businesses that need some time to catch up on past-due payments and want to remain in operation while they do so. Under Chapter 11, businesses facing mounting debt have the option of proposing a plan to restructure their business debts, which may involve adjustments to interest rates, repayment extensions or other methods of debt reorganization. What sets Chapter 11 apart from other bankruptcy chapters is that the debtor in Chapter 11 is a “debtor-in-possession,” meaning the business or individual filing for bankruptcy remains in possession of all assets and business interests, and also acts as the trustee for the bankruptcy estate. There are a number of other advantages afforded to debtors who file under Chapter 11, including the ability to avoid liens, object to creditors’ claims, reduce the amount owed or paid to creditors, and extend the amount of time for repayment, and in the hands of the right Los Angeles bankruptcy attorney, a Chapter 11 bankruptcy filing can put your business finances in much better shape than they were before.
How Chapter 11 Bankruptcy Works
The main purpose of declaring Chapter 11 bankruptcy in Los Angeles is to propose a Plan of Repayment, which is essentially a repayment contract that lays out how you plan to restructure your business debts and repay your creditors. Once you propose the plan, it must be approved by a majority of your creditors and confirmed by the court, and once the reorganization plan is confirmed, the plan effectively replaces or supersedes any contracts that existed prior to the bankruptcy petition being filed. You will then be required to make payments according to the confirmed reorganization plan.
A Chapter 11 case begins when a petition is filed with the bankruptcy court, usually by the business or individual seeking debt relief, but a petition can also be filed by the creditors seeking repayment in certain cases. Once the bankruptcy petition is filed, a “stay” automatically goes into effect, which effectively suspends all judgments, foreclosures, repossessions of property, and collection activities by creditors for a period of time. This automatic stay gives the business time to reorganize its debts, negotiate with creditors and find a manageable solution for resolving the business’ financial difficulties.
The specific way in which a Los Angeles Chapter 11 bankruptcy case proceeds depends on whether the business is a corporation, partnership or sole proprietorship. If the business is a corporation, Chapter 11 bankruptcy does not put the personal assets of the stockholders at risk (other than their investment in the company’s stock), as the corporation exists separate and apart from its owners. If the business is a partnership, even though the partnership in this case also exists separate and apart from its partners, the partners’ personal assets may be used to repay creditors in a Chapter 11 bankruptcy case, or the partners may be forced to file for bankruptcy protection. If the business is a sole proprietorship, the business does not exist separate and apart from its owner(s). As such, a Chapter 11 bankruptcy case involving a sole proprietorship will include both the business and personal assets of the owner or owners.
Once your Chapter 11 reorganization plan is confirmed by the court, you will be discharged from all debts filed in the plan. However, like with other bankruptcy plans, there are certain debts that are not dischargeable under a Los Angeles Chapter 11 bankruptcy plan, meaning you will still be liable for repaying these debts even after declaring bankruptcy. These non-dischargeable debts include the following:
- Spousal support
- Child support
- Certain tax debts
- Debts for personal injury or wrongful death caused by DUI
- Debts for certain criminal restitution orders
- Debts for willful and malicious injury to another person or person’s property
What if My Reorganization Plan is Denied?
In Chapter 11 bankruptcy, creditors have the right to reject the proposed reorganization plan for any number of reasons, including if they wish to challenge the valuations made by the debtor, if they don’t believe the debtor meets the requirements of a Chapter 11 bankruptcy filing, or if they believe the plan lacks the detailed financial estimates necessary to demonstrate its success. Negotiating with creditors to get your debt reorganization plan approved is no easy task, and if you are unable to come to an agreement with the creditors who object to the plan, the court can force the creditors to accept the terms of the plan, in what is known as a “cram down.” Obviously, proposing a reorganization plan that everyone can agree to is a more favorable solution, but our skilled bankruptcy attorneys are prepared to represent you in any way necessary, including requesting that the court invoke the cramdown provision of the bankruptcy code. That being said, by hiring an experienced Los Angeles bankruptcy attorney from the beginning, you can improve your chances of your debt reorganization plan being approved and confirmed and avoid a cram down altogether.
How We Can Help
Bankruptcy is a complex and specialized area of the law and the only way to ensure that you choose the bankruptcy plan that makes the most sense for your financial situation is to consult a bankruptcy attorney with experience handling a wide variety of bankruptcy cases in Los Angeles and the surrounding area. At Resnik Hayes Moradi LLP, our bankruptcy attorneys bring more than 50 years of collective legal experience to the table and we have represented thousands of clients in bankruptcy cases in Los Angeles, Riverside, San Bernardino, San Fernando Valley, and Orange Counties. We have the knowledge and expertise necessary to help you assess your financial situation and choose the bankruptcy plan that best suits your specific circumstances and gives you the best chance of achieving financial freedom. Regardless of the extent of your business debt, we will handle every aspect of your bankruptcy case, including negotiating with creditors on your behalf and representing your case in front of the bankruptcy court, so you can concentrate on your newly restructured business. Our seasoned Los Angeles bankruptcy attorneys can answer any questions you have about Chapter 11 bankruptcy and developing a reorganization plan and will guide you through the process of filing for bankruptcy, from beginning to end.
Contact Our Los Angeles Bankruptcy Attorneys Today
As a business owner considering bankruptcy, you probably have important questions about what Chapter 11 bankruptcy entails and what filing for bankruptcy would mean for you and your business. It takes an attorney with extensive experience handling Los Angeles bankruptcy cases to help clients understand the scope of their debt-relief options and select the bankruptcy plan that is right for their specific financial situation. If you are looking for ways to tackle overwhelming debt while keeping your business in operation, and you think Chapter 11 bankruptcy is the best choice for you, contact our skilled Los Angeles bankruptcy attorneys at Resnik Hayes Moradi LLP today. Chapter 11 bankruptcy cases in Los Angeles can last anywhere from several months to several years, so don’t wait to get the process started. Our bankruptcy lawyers know how important the financial well-being of your business is to you, and we are here to help.
“The bankruptcy attorneys at Resnik Hayes Moradi LLP provided us the peace of mind I so desperately needed. I was not sure what to do and I felt like I was at the end of my rope. They were there the entire step of the way and gave me the necessary information I needed to make the right choice for my family.” – Dave B.