Chapter 11 Bankruptcy California
Practice Areas
Orange County Chapter 11 Bankruptcy Attorneys
If you’re a business owner or an individual facing overwhelming debt, an experienced Orange County bankruptcy lawyer at Marshack Hays Wood can help you regain control of your financial affairs through Chapter 11 bankruptcy. Our firm has extensive experience helping business debtors and individuals reorganize debt while protecting their assets and operations. We work closely with clients to develop a customized repayment plan that aligns with their best interest, ensuring a path toward long-term financial stability.
Contact Marshack Hays Wood by calling (949) 333-7777 today to discuss how Chapter 11 bankruptcy can provide the relief and restructuring solutions you need.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is known as “reorganization bankruptcy” and is often filed by businesses. This bankruptcy code allows businesses to file for bankruptcy by reorganizing their debts while remaining open for business. A Chapter 11 bankruptcy filing benefits businesses since it will enable them to continue operations while trying to get their debts paid off.
Individuals can file under Chapter 11, but they usually file under Chapter 7 or Chapter 13 because they are less expensive and faster. If you have many assets, filing Chapter 11 may be more beneficial than a Chapter 7 or Chapter 13 filing. Typically, when an individual files for bankruptcy under Chapter 11, they do not qualify for Chapter 13.
Before filing for bankruptcy, it’s important to discuss your options with a bankruptcy attorney. At Marshack Hays Wood, our Orange County bankruptcy attorneys have over 75 years of combined experience helping individuals and businesses throughout the bankruptcy petition process. If you’re considering a Chapter 11 bankruptcy in California, give us a call at (949) 333-7777 today.
What is the Difference Between Chapter 7 and Chapter 11?
Chapter 7 bankruptcy is for lower-income individuals looking for a quick fix for their financial woes and wanting to get rid of unsecured debts. While businesses usually file for Chapter 11 bankruptcy, individuals can also file under this bankruptcy code. People filing under Chapter 11 bankruptcy have a much higher income level; for example, when celebrities file for bankruptcy, they often file a Chapter 11.
Chapter 7 bankruptcy does not allow for a reorganization plan of debts. Instead, a trustee will liquidate all non-essential assets. In Chapter 11, however, the individual can negotiate and keep certain assets.
Another area where Chapter 7 and Chapter 11 differ is the cost and time frame. A Chapter 11 filing is much more expensive and takes longer than a Chapter 7.
What is the Difference Between Chapter 9 and Chapter 11?
The most significant difference between Chapter 9 and Chapter 11 is who is eligible to file. Chapter 9 bankruptcy offers bankruptcy relief for municipalities. Cities, towns, counties, and even school districts can file for Chapter 9 bankruptcy. Only individuals or businesses can file for bankruptcy under Chapter 11.
What is the Difference Between Chapter 11 and Chapter 13?
To qualify for Chapter 13 bankruptcy in Orange County, your bills can’t be more than $1,395,875 in secured debt, like mortgages and car payments, and $465,275 in unsecured debt, like credit cards. A Chapter 11 filing is more popular with businesses and celebrities since their debts exceed these amounts.
Another difference between a Chapter 11 and Chapter 13 filing is that a trustee is always appointed during a Chapter 13 bankruptcy case. Overall, a Chapter 13 filing is much less complicated than a Chapter 11 and is over much quicker.
Who Can File Chapter 11 Bankruptcy?
Since there are no limitations or requirements when filing for a Chapter 11 bankruptcy, almost any person or business is eligible to file. If you want to reorganize your business or personal finances, you can file for Chapter 11. The only entities not eligible for a Chapter 11 filing are government agencies, insurance companies, banks, estates, nonbusiness trusts, stockbrokers, commodity brokers, and Small-Business Administration-licensed investment companies. Individuals who have had a bankruptcy dismissal within the last six months are also not eligible to file for Chapter 11.
Personal Bankruptcy and Chapter 11
Individuals who choose to file a Chapter 11 bankruptcy either do not want their assets liquidated like during a Chapter 7 bankruptcy or have too much secured and unsecured debt to qualify for a Chapter 13 bankruptcy.
Business Bankruptcy and Chapter 11
Businesses filing for Chapter 11 bankruptcy can continue operations but need court approval before making significant business decisions. The bankruptcy court may appoint a trustee if fraud, dishonesty, or incompetence is detected.
Chapter 11 and Small Businesses
As of February 2020, the Small Business Reorganization Act went into effect. This added Subchapter V to the Chapter 11 Bankruptcy Code, which made filing bankruptcy easier for small businesses. According to the U.S. Department of Justice, a small business eligible for bankruptcy under this act is “defined as entities with less than $2.7 million in debts that also meet other criteria.”
The Small Business Reorganization Act shortened the bankruptcy process for small businesses and allowed for more flexibility with creditors. The act also ensures that a private trustee is assigned to work with the small business debtor and creditors to develop a reorganization plan.
Can a Judge Deny My Chapter 11 Petition?
A bankruptcy judge may deny your Chapter 11 petition due to the following reasons:
- There is already a similar filing in place that has been dismissed.
- Failure to appear at the initial court hearing.
- Failure to undergo credit counseling within the 180-day window.
How Does Chapter 11 Bankruptcy Work in Orange County?
All bankruptcy cases begin when the debtor files a bankruptcy petition. Once the petition has been filed, the business or individual is granted an automatic stay meaning that creditors can no longer try to collect payments from the debtor. After the filing, the court oversees all operations of the business. The court also helps the company reorganize debts to be paid off. Businesses usually remain open during the bankruptcy process. The debtor remains in control of the business, but in certain circumstances, the court will appoint a trustee to run the business if fraud is suspected.
While the debtor can continue running the company in most cases, the court must approve all decisions. This means they must approve any asset sales, rental agreements, business operations, retaining and paying attorneys, and contracts with vendors. The business has the right to propose a reorganization plan for bankruptcy. These plans typically include downsizing or liquidating assets to pay creditors.
Chapter 11 Repayment Plan
The debtor has up to 18 months to propose their reorganization plan. Once that time is up, creditors can step in and submit their own reorganization plans. The creditors committee must accept the plan. Once the majority of the creditors have accepted the plan, the court must approve it.
When approving the reorganization plan, the court considers whether it’s feasible for the debtor to make monthly payments to creditors according to the plan. The repayment plan must benefit the creditors and involve more payment than they would receive under a Chapter 7 filing.
A Chapter 11 reorganization plan is uniquely crafted for that particular debtor, unlike a Chapter 13 repayment plan. The two most important rules for a Chapter 11 repayment plan are that all taxes must be paid within five years and meet the above criteria. Once the creditors and court approve the reorganization plan, the repayment process begins.
How Do I Qualify for a Chapter 11 Case?
Anyone can qualify for a Chapter 11 bankruptcy case since there is no specific level of debt or required income to file.
How Much Does it Cost to File Chapter 11 in Orange County?
In Orange County, the cost of filing a Chapter 11 bankruptcy case is $1,738. A Chapter 11 filing is more expensive than a Chapter 7 or 13. Where a Chapter 11 bankruptcy case gets costly, though, is the attorney fees. Depending on the case’s complexity, those fees could start at $10,000 and go up to $100,000.
How Long Does Chapter 11 Bankruptcy Take?
The business or individual filing for Chapter 11 bankruptcy has up to 18 months to submit the reorganization plan before the creditors file their own proposed reorganization plan. Typically individuals and small businesses can receive an approved reorganization plan within the 18 months.
The repayment portion of Chapter 11 has no real time limit other than it can last for years. Usually, the payoff period lasts up to five years. There are some circumstances where the repayment process is shorter, like if the business is sold.
Benefits of Filing Chapter 11 in Orange County
When filing for a Chapter 11 bankruptcy, the greatest benefit is that the business can continue operations during the reorganization process. This allows the business entity to continue generating income to pay creditors. Typically, creditors favor a business filing for Chapter 11 bankruptcy since they’ll be more likely to recover most, if not all, of their money. Whereas if the business closes, the creditors will not receive any money back.
Downsides of Filing Chapter 11 in Orange County
The biggest disadvantage to filing for Chapter 11 bankruptcy is that it is a highly complex process. Compared to other bankruptcy filings, Chapter 11 is not only the toughest bankruptcy law, but it’s also the most expensive bankruptcy case to file. If a business or individual considers filing for Chapter 11, the legal fees alone may deter them. In addition to the cost, the reorganization plan must be court-approved and realistic enough that the business can repay its debts.
How Can Bankruptcy Lawyers in Orange County Help Me?
People spend years building their businesses from the ground up, but financial crises risk ruining all that hard work. Sometimes the only way out is to file for bankruptcy. Filing a Chapter 11 bankruptcy is the most challenging bankruptcy case to file. Its rules are extremely complicated and leave much room for error.
Once you decide that filing a Chapter 11 is the best way to save your business or individual finances, you’ll want to contact an experienced Orange County bankruptcy attorney. Even the slightest misstep in filing for bankruptcy can mean an automatic dismissal. Continuing business operations and keeping up with all the bankruptcy proceedings can be overwhelming. Let the bankruptcy attorneys at Marshack Hays Wood carry that burden for you. Not only will we handle the filing, but we will navigate the entire process for you.
Call Marshack Hays Wood for Chapter 11 Bankruptcy Assistance in Orange County, CA Today
At Marshack Hays Wood, our attorneys have a combined 75 years of experience handling bankruptcy cases for individuals and businesses. When you file a Chapter 11, you’re in good hands with our experienced bankruptcy attorneys. We will be with you every step of the way, from the filing to the reorganization plan and more. Call us today at (949) 333-7777 or reach out online to schedule a consultation and begin your road to financial recovery.
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