Orlando Chapter 11 Bankruptcy Attorney
While it is well-known that it is common for individuals to file bankruptcy when their debt becomes unmanageable, businesses have this option, too. Chapter 11 is one type of bankruptcy that is mainly reserved for businesses and among those, large corporations. Small businesses and individuals can also file Chapter 11 in certain circumstances, but this is much more rare. Of all the different types of bankruptcies, filing Chapter 11 is one of the most complex. Our Orlando Chapter 11 bankruptcy attorney explains more about the process below.
How Does Chapter 11 Bankruptcy Work?
Like other types of bankruptcies, a Chapter 11 case will officially begin when the bankruptcy petition is filed with the court. As soon as the petition is filed with the court, an automatic stay is issued. The automatic stay prohibits creditors from trying to collect the debt while the bankruptcy case is ongoing. They are also prohibited from taking legal action against the business or individual.
As in Chapter 13 cases, a Chapter 11 bankruptcy requires the borrower to draft a repayment plan. Unlike in Chapter 13, there is no time limit placed on these plans, as the amount of debt is typically much greater. The biggest benefit of Chapter 11 is that businesses can continue operations while their bankruptcy case is pending. Still, businesses must have sufficient revenue, which is why this type of bankruptcy is often not appropriate for small businesses.
Also unlike other types of bankruptcies, Chapter 11 can be filed involuntarily. This occurs when the creditors come together and file on behalf of a business, essentially forcing the business into the process. When a business does not have the sufficient income to file Chapter 11, they will have to file Chapter 7. Businesses are not allowed to file Chapter 13.
Benefits of Chapter 11 Bankruptcy
The fact that a Chapter 11 bankruptcy allows a business to continue running while the case is ongoing is its biggest benefit. However, there are others, as well.
Creditors are often more likely to accept the terms of a Chapter 11 repayment plan. They know that if the plan is approved, they will be able to recover some or all of the debt. This is not always possible in Chapter 7. Additionally, borrowers can ask for emergency relief during the bankruptcy process, which can help them obtain loans at better rates. Emergency relief can continue to pay workers’ wages and protect the interests of shareholders. Additionally, business owners can also ask the court for the authority to sell property unencumbered by liens, which can help them comply with the repayment plan.
Our Chapter 11 Bankruptcy Attorney in Orlando Can Protect Your Best Interests
If you are struggling with debt, our Orlando Chapter 11 bankruptcy attorney at Ronald Cutler can provide the sound legal advice you need during this difficult time. Call or text us now at 386-490-9949 or chat with us online to schedule a free review of your case with our experienced attorney and to learn more.
