If you are an individual and not a business you’ve probably never heard of a Chapter 11 bankruptcy. It is a real thing.
Chapter 11 bankruptcy is usually filed by companies and business large and small to reorganize their debt. It is also submitted by individuals that have assets that exceed what can are allowed in a Chapter 13 bankruptcy.
It is much more expensive to file a Chapter 11 bankruptcy, and the legal fees are much higher as well. The fees are substantially higher than in the more common consumer Chapter 7 bankruptcy.
You may have heard of Chapter 13 bankruptcy for consumers. That is the type of bankruptcy that is closest to the Chapter 11.
But in a Chapter 11 bankruptcy, a creditor committee is formed by the bankruptcy trustee assigned to the case. The group of creditors is responsible for overseeing the case, making sure the debtor follows the rules and can operate the business that filed bankruptcy.
Chapter 11 Bankruptcy Creditor Committee
Besides the intrusive creditor committee, the small business debtor must also attend an initial interview with the bankruptcy trustee. This interview will examine the operation of the small business, review the business plan, and look at debtor obligations.
Unlike a Chapter 7 bankruptcy which takes about 90 days to finish or a Chapter 13 bankruptcy which can take 3-5 years, the Chapter 11 bankruptcy can go on for many years.
Those individuals who file a Chapter 11 bankruptcy for special protection of their assets can elect to terminate their Chapter 11 bankruptcy and convert it to a Chapter 7 bankruptcy to obtain a quick elimination of their debts.
There are very technical features of a Chapter 11 bankruptcy, and if you are thinking about filing this chapter of bankruptcy, you should find an attorney to assist you.
Some of the companies that have filed a Chapter 11 bankruptcy include Delta Airlines, General Motors, Chrysler, and United Airlines.
For more information on Chapter 11 bankruptcy, click here.