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CHAPTER 11 BANKRUPTCY
              Chapter 11 bankruptcy is essentially debt reorganization. It is the usual choice for larger businesses due to the fact that there are no limitations to the amount of debt that may be reorganized, unlike chapter 13 which has debt limitations. Chapter 11 is available to individuals, corporations and partnerships. Individuals do not typically choose to file for a chapter 11 due to the fact that it is much more expensive and it has many more detailed requirements than other chapters available to individuals. 
            A corporation exists separate from its stockholders. The chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk, only the value of their stock in the company. In partnership chapter 11 bankruptcy (partnership as debtor), however, the partners' personal assets may be used to pay creditors in the bankruptcy case or the partners, may be required to file bankruptcy protection. Unfortunatley, a chapter 11 bankruptcy case involving a sole proprietorship includes both the business and personal assets of the owners-debtors.
            Individuals usually reorganize under Chapter 13, which offers a detailed plan at a fraction of the cost of chapter 11, which allows the individual to keep possession of  assets, catch up on secured debt, and discharge some remaining  unsecured debt at the end of the agreed plan.              The  trustee plays a major role in monitoring the progress of a chapter 11 case and supervising its administration. The  trustee is responsible for monitoring the debtor in  operation of the business and the submission of operating reports and fees. The trustee also imposes some requirements on the debtor in such as reporting its monthly income and operating expenses and paying current employee withholding and other taxes.
             By law, the debtor in possession must pay a quarterly fee to the U.S. trustee for each quarter of a year until the case is converted or dismissed. After filing a petition, the debtor has 120 days to submit a structured reorganization plan which must be approved by certain court appointed persons, such as creditors or administrators.

           For more information regarding a chapter 11 bankruptcy or to discuss options for you or your business, call our office for a FREE consultation.

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