Operating a business comes with various financial obligations. Sometimes, however, you might be unable to meet your business’ debt obligations despite your best efforts. In these times, filing a chapter 11 bankruptcy can be an ideal choice for your business’ wellbeing.
Unlike other chapters, Chapter 11 bankruptcy reorganization contains no debt limits and allows you to restructure your debt. Bankruptcy law firms like Barski Law Firm PLC often say that Chapter 11 is often the ideal debt relief option for large and small companies.
To know more, here are the main elements of Chapter 11 that will affect your reorganization plan:
After submission of an order of relief, you have 120 days to come up with and file your reorganization plan. Companies with debts of not more than $2 million and small businesses may have 100 days. Your creditors should endorse the plan within 180 days from the day you submit your order of relief and in fast-tracked cases, 160 days.
All claims in your plan should be classified. You can classify all secured claim separately and have a general category for unsecured ones then a third class is for employees. Claims can, however, only be classified together if they are substantially similar. Your plan must also contain the method of treatment, as well as the implementation, for all the claims in each class.
No reorganization plan is complete without a plan on how impairment classes will be handled. This class comprises all groups with similar claims which won’t be fully paid by the official date of your established Chapter 11 plan. Never forget to include impairment classes as failure to do so means you assume the acceptance of the creditors, but you are not legally required to solicit their approval.
Incorporating the above elements in your reorganization plan is not as easy as it sounds. Any issues with your plan might wreck your company when creditors come calling. It is hence essential to have a bankruptcy lawyer advise you on how to handle your plan for the good of your company.