Under a Chapter 11 bankruptcy, a business reorganizes its financial affairs to pay off debts to creditors. Only a corporation, partnership or sole proprietor may file for a Chapter 11 bankruptcy reorganization plan.
During the process of a Chapter 11 bankruptcy, the business submits a full list of all its assets and liabilities. It also includes a thorough list of its current financial affairs. Typically, there is no official trustee assigned to the Chapter 11 bankruptcy case. The debtor acts as its own trustee and holds its own meetings of creditors. If the court finds that the debtor acts inappropriately in this role, or if the debtor mismanages the funds, the court may, however, appoint a trustee to the Chapter 11 bankruptcy case.
How a Chapter 11 Bankruptcy Works
Approximately 30 days after a business files for a Chapter 11 bankruptcy reorganization plan, the business and its Morris County bankruptcy attorney meet with all creditors. It is the responsibility of the debtor to file monthly reports detailing the profits and losses of the business, the lists of where all income comes from and to whom all expenditures are paid. Chapter 11 bankruptcy fees are paid to a U.S. Trustee on a quarterly basis, based on the amount of debt paid by the debtor business.
Under Chapter 11 reorganization, the debtor business remains operational. The business must create a monthly payment plan for each creditor and business profits must go to each creditor every month. During Chapter 11 reorganization, the business makes tough financial decisions about how to spend its money in order to pay off debts in a timely fashion. A Chapter 11 reorganization plan typically includes:
- Financial history that led to the filing
- List of assets
- List of liabilities
- A description of monthly income and expenditures
- A detailed description of how creditors will be treated
- A projection of monthly earnings
- A property liquidation analysis
- A tax payment plan
A qualified Morris County bankruptcy lawyer works with debtor businesses to get through the bankruptcy process. An experienced bankruptcy lawyer knows how to create a reorganization plan and helps establish a unique plan for each business. A Morris County bankruptcy attorney is an integral part of the successful reorganization of a business in a bankruptcy and can make the difference in a healthy financial business life.