West Palm Beach Chapter 11 Attorney
Owning a business is both rewarding and stressful. Besides focusing on the daily operations, staffing, expenses, and customer service, you constantly must worry about the bottom line. When there just is not enough money coming in, debt begins to build. One of the most challenging decisions a business owner must make is whether or not to file for Chapter 11 bankruptcy. A West Palm Beach Chapter 11 attorney can answer all your questions. Let Brian McMahon put his 30+ years of experience to work for you.
Restructuring Debts Under Chapter 11
When a business needs to file for Chapter 11, it does so by reorganizing its debts with the help of the United States Bankruptcy Court. In many cases, the company will be able to remain operational during the bankruptcy proceedings. The most common types of businesses that file for Chapter 11 include limited liability companies, partnerships, and corporations.
It is possible for an individual to file for Chapter 11, but only if they fail to qualify for Chapter 7 or Chapter 13. The individual likely has a lot of insurmountable debt that cannot be reorganized or paid off with a plan using the other two bankruptcy options available. Chapter 11 is a long process, so be prepared for it to take months to resolve.
Business as Usual When Filing for Chapter 11
One of the biggest advantages of filing for Chapter 11 is that the business can continue to run as usual in most instances. However, if there was fraud or gross incompetence present, the business could be assigned a trustee by the bankruptcy court. The company will continue to operate but at the direction of the trustee.
Even if there is no trustee appointed, the business will only be able to make certain decisions with the assistance of the court. The decisions that must be approved by the court include the following:
- Sale of business assets that are not part of inventory
- Ending or beginning a rental agreement
- Expanding or stopping the company’s operations
- Acquiring the services of an attorney and paying them
- Agreeing to contracts with unions and vendors
Finally, the company is not permitted to secure a loan that will begin once the bankruptcy process has ended.
The Business Proposes an Initial Reorganization Plan
Another benefit of filing for Chapter 11 is that the business has the initial advantage of filing a reorganization plan. Most reorganization plans might include the following:
- Downsizing the operations of the company in order to reduce its expenses
- Renegotiating debts
- Liquidating all the company’s assets to repay its creditors
If the proposed reorganization plan is deemed fair by the creditors and the court, the court will officially accept it, and the process begins. Do not miss a single payment due date to any of your creditors, as this can significantly impact the bankruptcy filing in a negative way. If you have trouble repaying your creditors, speak with an attorney immediately.
Chapter 11 Bankruptcy Timeline
The timeline for Chapter 11 bankruptcy can last for years. There are no finite dates for this bankruptcy option, which means it can take anywhere from a couple of months to years for it to come to a resolution. Most Chapter 11 cases resolve anywhere from six months to two years, while some can be resolved in a much quicker fashion. If your case is complex, with a large amount of debt, it can take upwards of five years to complete.
The Pre-Confirmation Stage
The initial part of Chapter 11 is known as the pre-confirmation stage. This is when the filer has four months after the filing date to come up with a reorganization plan. In most cases, the deadline can be extended to six months.
The Post-Confirmation Stage
After the reorganization plan is put into place, the filer has anywhere from 30 to 90 days to start making payments to its creditors. The payments are usually extended over a long period because they must be made in a set order. The order is as follows:
- Secured creditors must be paid first
- Priority creditors must be paid second
- Unsecured creditors are paid third
Filing Chapter 11 as an Individual
An individual can file for Chapter 11 if they meet one of the following requirements:
- The individual has too much debt that disqualifies them for a Chapter 13 reorganization plan
- The individual does not want to liquidate the assets to their name under Chapter 7
The biggest advantage of filing Chapter 11 as an individual is that it allows you to lower the interest rate and extend the terms of repaying the debt. This means that your monthly payments will be lower than originally thought at the beginning of the process.
How Can a West Palm Beach Chapter 11 Attorney Help?
If your business is swimming in debt, it is in your best interest to speak with a West Palm Beach Chapter 11 attorney as soon as possible. An attorney can help you with all of the following:
- Evaluate your company’s financial situation
- Provide an honest assessment of where you stand and whether bankruptcy will help
- Ensure that you file all of the required paperwork by the deadlines
- Represent you in bankruptcy court
- Help you create a reorganization plan that satisfies creditors and the court
It is important to note that a Chapter 11 bankruptcy filing, if approved and completed, will remain on your credit report for at least seven years. This can significantly hinder your company’s ability to apply for loans and even start new businesses.
Call Brian McMahon for Chapter 11 Advice Today
Do you have questions about your company’s debt? Are you ready to explore your bankruptcy options? If so, it is time to speak with an experienced West Palm Beach Chapter 11 attorney. Call Brian McMahon at 561-658-1789, or complete the contact form to schedule a free consultation. We serve clients in West Palm Beach, Port St. Lucie, Boca Raton, and all of South Florida.