A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a "reorganization" bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.
A plan of reorganization is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.
Chapter 11 bankruptcy is the most complex form of bankruptcy proceeding. A Chapter 11 bankruptcy allows a company to stay in business and restructure its obligations but can take up to a few years to achieve completion.
For these reasons, a company must consider Chapter 11 reorganization only after careful analysis and exploration of all other possible alternatives.
The business is not able to make some decisions without the permission of the courts. These include the sale of assets, other than inventory, starting or terminating a rental agreement, and stopping or expanding business operations.
The court also has control over decisions related to retaining and paying attorneys and entering contracts with vendors and unions. Finally, the debtor cannot arrange a loan that will commence after the bankruptcy is complete.
Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid while giving creditors a chance to obtain some measure of repayment based on the individual's or business's assets available for liquidation.
In theory, the ability to file for bankruptcy benefits the overall economy by allowing people and companies a second chance to gain access to credit and by providing creditors with a portion of debt repayment.
Contact the Law Office of Gordon Mosley at 903-534-5396 to schedule your first appointment or by sending us a message. I will do my best to get back to you as soon as possible.
Mr. Mosley's office is located in Tyler Texas and serves the surrounding areas.