Chapter 11
Roger E. Naghash, a leading California Chapter 11 bankruptcy attorney, is dedicated to helping debtors obtain the most suitable form of bankruptcy protection so they can quickly get back on their feet. We are proud to provide the highest quality legal representation to individuals and businesses in Orange County and other areas of California.
Bankruptcy is a process that allows individuals and businesses to either “eliminate” their debts through the sale of assets or repay them by restructuring the business. According to the U.S. Courts’ Administrative Office, more than 1,300,000 bankruptcy cases were filed in 2009. The majority of these were “consumer” cases, making chapter 11 the most popular form of bankruptcy protection in the country. In fact, there was a 91% increase in Chapter 11 filings in 2009. California continues to lead the nation in total bankruptcies, with nearly 140,000 cases filed in 2011. Chapter 11 petitions have increased despite the national fall in cases filed last year.
Like other forms of federal bankruptcy protection, Chapter 11 gets its name from Chapter 11 of the U.S. Bankruptcy Code. Although individuals can also seek protection under Chapter 11, it is used primarily for businesses such as corporations and partnerships or for individuals who do not meet the requirements to file under Chapter 13. Chapter 11 permits companies to remain in business while they restructure the organization and to use the profits to repay creditors. Chapter 11 is unique in that the debtor is the Trustee for the estate and remains in possession of all its assets while the case is in court. Other advantages of filing for Chapter 11 include:
- Extension of time to repay existing creditors
- The power of the debtor to object to creditors’ claims
- Potential reduction in the amount owed or paid to creditors
- Keeps businesses intact through reorganization and repayment
- Greater flexibility and options than other chapters in lower debt cases
- Buys time to sell real estate with equity or deal with delinquent taxes
- Discretion to avoid leans, reject leases and contracts with no penalty
Chapter 11 allows businesses to restructure their finances so they can continue to operate, provide employees with jobs, pay creditors, and produce a return for stockholders. The rationale for allowing such reorganization is that the value of a business as an ongoing concern is greater than it would be if its assets were sold. That is why Chapter 11 grants businesses a reprieve to either extend or reduce debts or lower operating costs, allowing them to “return” to a more viable state. Pursuant to 11 U.S.C §1101, the “debtor in possession” continues to operate the business and performs many of the same functions of a trustee while keeping control of the assets during reorganization. Under the Bankruptcy Code, these powers include providing an accounting of property, objecting to claims, and filing reports “as necessary” or as required by the court.
If you are an individual or business owner filing for bankruptcy, an experienced Newport Beach Chapter 11 bankruptcy attorney can explain which type of protection best suits your needs. Roger E. Naghash has successfully handled all types of bankruptcy cases, helping individuals throughout California restructure their businesses and repay their debts. No matter what your personal or business liability, we can help you get back on your feet. Contact us at (949) 955-1000 for a confidential consultation. We look forward to hearing from you.