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Chapter 11 bankruptcy – what is Chapter 11 Bankruptcy?
Chapter 11 Bankruptcy provides for the reorganization of a corporation or partnership. The idea of Chapter 11 Bankruptcy is to give the debtor opportunity to propose a plan to reorganize his corporation keep his business alive and satisfy creditor payments over some period of time individuals can seek relief under chapter 11 bankruptcy as well as organization. The person or organization who files for chapter 11 bankruptcy is called a “debtor in possession”. The debtor in possession has the duties and power of a trustee and can operate his business by borrowing some funds if he needs to with court approval.
How to start Chapter 11 Bankruptcy?
A chapter 11 bankruptcy starts with a petition; with a petition, (official form for individual 201) voluntary petition for non-individuals. In chapter 11 bankruptcy you need to file a list of creditors who have the 20 largest unsecured claims. Also, you have to prepare a mailing list of creditors. The 2nd package for filing a voluntary petition needs to be filed within 14 days after the filing of the original petition the 2nd set of the document includes, corporate resolution, and authorizing the filing of the petition. This is a requirement only for the corporation debtor, corporate ownership statement should be also included in the package as well as a list of equity as well as a list of security holders. You need to provide a statement of financial affairs for a non-individuals debtor.
It is important to point your attention that chapter 11 bankruptcy for corporations should be done by the bankruptcy attorney. Unlike other litigation, a self-represented person is not allowed for chapter 11 bankruptcy.
When you start Chapter 11 bankruptcy you need to provide certain documents to the US trustee within 7 days after you file the original petition. Such documents include a declaration of the debtor regarding compliance with United States Trustee Guidelines. Real property questionnaire answer all commercial leases other agreements of the corporation’s financial statement, etc.
If the debtor is not a corporation or partnership but the individual additional documents should be provided in this article we will emphasize attention on chapter 11 bankruptcy for corporations.
Bankruptcy Administrator or the US Trustee. The Trustee has an important role in monitoring what going on with the case during a chapter 11 bankruptcy. US Trustee will be monitoring the operation of the debtor and submitting operational reports. US Trustee is also responsible for monitoring applications for compensation and reimbursement by legal, financial, and other professionals. US Trustee organizes meetings between the debtor and his creditors including important 341 meetings. The U.S. Trustees’ responsibility is reporting debtors’ monthly income, operating expenses, and establishment of new bank accounts and payments to employees.
Requirements for Chapter 11 Bankruptcy for the corporation:
1. The debtor must be represented by an attorney
2. The debtor must file all the documents at the bankruptcy court in a specific order and in a specific time
3. The debtor must pay the Chapter 11 bankruptcy filing fee at the time of filing.
Chapter 11 bankruptcy creditors’ committee place an important role in chapter 11 bankruptcy cases the committee is usually appointed by the trustee and includes unsecured creditors who have the largest claims against the debtor the committee performs many functions including consulting with the debtor in the collection while the case is pending. The committee also investigates debtor operation of the business and debtor conduct in some circumstances creditors’ committee retains an attorney or other professionals performing the duties. A creditor committee plays a significant role to safeguard proper management of the business by the debtor.
Chapter 11 Bankruptcy automatic stay.
During automatic stay all judgments, foreclosures, collection activities, and property repossession should be stopped. Under some circumstances the secured creditor may ask for the court order to grant relief from the automatic stay, the bankruptcy court allows fee payment to certain professionals in the case adaptor attorney and trustee may apply to the court within 120 days for their compensation and payment reimbursement.
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