What is a Chapter 11 Lawyer?

Answer 1

A Chapter 11 lawyer is an attorney with a specialization in Chapter 11 bankruptcy. This is a specific type of bankruptcy that applies within the jurisdiction of the United States of America. It explains how reorganization can take place when filing for bankruptcy. This type of bankruptcy can be taken advantage of either by individuals or by business entities, but it is generally used by corporations. Chapter 11 is about reorganization, while Chapter 7 is about liquidating assets and Chapter 13 is about reorganization for individuals. Chapter 11 bankruptcy can not be undergone successfully without the aid of qualified professionals, and this is where the aid of a Chapter 11 attorney becomes necessary. When a business reaches the point where it can not pay off its debt on time, the business can file for bankruptcy in the federal courts with either Chapter 7 or Chapter 11. Under Chapter 7 bankruptcy, the business would sell off all of its assets and give the cash earned to its creditors. With Chapter 11, the debtor keeps ownership of the business, which undergoes reorganization. Chapter 11 allows a debtor to restructure their business in several ways. The court may allow former contracts to be canceled. They may be able to acquire loans by giving the new lenders highest priority with regard to the revenue of the business. Additional litigation against the business is prevented during bankruptcy court. If the debt of the company is greater than its value, the rights of the business will be transferred to the creditors. The amount of time that it takes for a Chapter 11 bankruptcy to be handled in the courts can last between a few months and a few years, depending on the complexity of the issue. For the first 120 days, the debtor has the right to propose plans for reorganization. After this time, creditors are also allowed to present plans. If a company owns stock which is traded publicly, Chapter 11 bankruptcy causes the stock to be delisted. In most cases, the stocks become useless. The reasoning behind Chapter 11 bankruptcy is the idea that businesses can provide more value when they are reorganized and distributed then when the individual parts are sold off as assets. By keeping the business running, canceling debts, and transferring ownership of the company, it is possible for more value to be transferred to the creditors than if the individual parts are sold. This can also prove more beneficial for the debtor as well.