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BUSINESS BANKRUPTCY
An individual debtor whose debts are 'primarily business debt' and debtors that are entities (eg. Corporations, Limited Liability Corporations and Partnerships) may file under Chapter 7 or Chapter 11 of the Bankruptcy Code.
What is a Chapter 7 business bankruptcy?
As with a consumer Chapter 7 bankruptcy, this option requires the liquidation of nonexempt assets, however, for individuals with primarily business related debt, the requisite qualifications are not nearly as stringent. Still, the individual with business related debt, may be able to claim certain property exempt and therefore retain such property after their case has closed. Nonexempt assets will however be liquidated by a trustee. For a corporation or other business entity, the filing of a Chapter 7 bankruptcy will conveniently and effectively allow the winding up of its affairs and orderly closure of the debtor's business. Upon liquidation of the entity's assets, the chapter 7 trustee will pay funds, if any, to the creditors.
What is a Chapter 11 bankruptcy?
A chapter 11 may be used by an individual with significant assets or a corporation or other entity that seeks to reorganize its finances. A chapter 11 bankruptcy gives the debtor breathing room and an opportunity to reorganize, whether restructuring debt, selling off assets or closing down divisions, all while keeping the business in operation. Importantly, the debtor's principals generally continue to operate the business while Chapter 11 bankruptcy proceedings are ongoing. Ultimately the debtor will propose a plan of reorganization setting forth how it intends to deal with the many issues that impact its future operations. Although a Chapter 11 bankruptcy can be both lengthy and expensive, it is a viable, useful and oftentimes indispensable tool for the business owner. Where negotiations often fail, the Bankruptcy Code can offer a debtor the ability to remove or reduce overwhelming debt, reject unprofitable leases or contracts and focus on the profitable activities that it knows can generate profits in the future. Where the current or impending hardship to a business may be resolved or overcome with time and focused effort, a chapter 11 bankruptcy reorganization may offer may benefits to the business owner.
Do you need a Chapter 7 or Chapter 11 Bankruptcy Lawyer?
Operating a business facing financial hardship is difficult enough, but adding to that the filing and compliance requirements for a business chapter 7 bankruptcy or chapter 11 bankruptcy can be overwhelming. The time requirements and limitations placed upon a debtor in bankruptcy are best handled by an experienced bankruptcy lawyer. In a chapter 11 bankruptcy the objective is to timely propose a plan of reorganization, and obtain confirmation of the plan by the bankruptcy court. Your lawyer will work with you to achieve this plan and will negotiate with your creditors to obtain their consent and endorsement. Additionally, pre-bankruptcy counseling and planning are an integral part of any chapter 11 bankruptcy case. Additionally, a corporation cannot represent itself and must therefore employ a lawyer to represent it. Attorneys specializing in bankruptcy generally have an enhanced education and experience recognized by the State Bar of California in the practice of bankruptcy law.
Offering legal services from Woodland Hills, Encino and Ventura to Beverly Hills, Santa Monica and all communities surrounding the greater Los Angeles area.
"We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code." 11 USC §541
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