Chapter 11 Bankruptcy Lawyer in Orlando, FL

How To File Bankruptcy Chapter 11 and How Chapter 11 Bankruptcy Works

When filing for Chapter 11 bankruptcy in Florida, a company develops a proposed plan of reorganization to keep the business operating and pay creditors over time. The reorganization plan outlines how the business will operate and pay its debts. Creditors affected by the plan may vote on it. The plan must satisfy certain legal requirements to be confirmed by the Bankruptcy Court.

Chapter 11 bankruptcy reorganization plans commonly extend five years.

In most Chapter 11 bankruptcies, the debtor retains possession of the business and has the powers and duties of a trustee. They may continue to operate the business and may even seek Court approval to borrow new money.

A Chapter 11 bankruptcy case begins when the business owner files a petition with the Bankruptcy Court serving the area where the debtor has its principal place of business, residence, or domicile. Typically, we help businesses file for bankruptcy with the Bankruptcy Court for the Middle District of Florida, which is in Orlando.

The debtor may voluntarily file a petition, or it may be an involuntary petition, which is filed by creditors that meet certain requirements.

Unless the Bankruptcy Court says otherwise, the debtor must also file with the court:

• Lists of assets and liabilities
• A schedule of current income and expenditures
• A schedule of unexpired leases and contracts under which obligations remain to be fulfilled
• A statement of financial affairs.

Individuals with substantial assets may also file personal Chapter 11 bankruptcies. Typically, an individual filing under Chapter 11 wants to avoid liquidating all their assets in Chapter 7 or has too much debt to qualify for a reorganization plan under Chapter 13.

If the debtor is an individual (or a married couple filing jointly), they must also file:

• A certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling
• Evidence of payment from employers, if any, received 60 days before filing
• A statement of monthly net income and any anticipated increase in income or expenses after filing
• A record of any interest the debtor has in federal- or state-qualified education or tuition accounts.

The debtor and their attorney will meet with personnel from the Bankruptcy Administrator’s office. The core of a Chapter 11 bankruptcy is the debtor’s plan to pay off outstanding debts, which they must present to the Bankruptcy Court. The plan may propose such alternative means of paying existing debt as adjusting interest rates, extending terms of payment, and reducing principal balances.

A Chapter 11 reorganization plan also proposes restructuring business operations to ensure a permanent resolution of the debtor’s financial problems. For example, a plan may require closing or selling less profitable subsidiaries, divisions, or lines of business, reducing staff, or making only partial payments on certain eligible debts.

Chapter 11 allows the debtor to maintain ownership of assets so that he or she can liquidate the business under more beneficial terms than a Chapter 7 individual bankruptcy allows.

In most cases, the debtor files a reorganization proposal within 120 days of filing the Chapter 11 petition. Extensions may be available for up to 18 months, though most do not allow more than 300 days.

After reviewing the reorganization plan, creditors may submit objections or modification requests and will eventually vote to either accept or reject the plan. If necessary, the debtor and creditors can negotiate changes to the plan. Under certain circumstances, the Bankruptcy Court may confirm a plan over the objections of creditors.

When confirmed, the debtor’s plan of reorganization becomes a binding contract between the debtor and the creditors.