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Chapter 11 Bankruptcy Attorney in Howell, New Jersey

Assisting Clients Though Bankruptcy
for Over 20 Years

Economic downturns and other financial difficulties can put a business in a tight spot. When a company is struggling to maintain payroll, its commercial leases, or payment schedules to vendors and suppliers, it may be time to consider Chapter 11 bankruptcy, a form of debt relief designed to support distressed business entities.

Filing for Chapter 11 bankruptcy allows a struggling but viable business to continue operating while they restructure finances and develop a plan for dealing with creditors. The Howell Chapter 11 bankruptcy lawyer at Fedoroff Firm LLC has over 20 years of legal experience and can give you the support that you need to successfully navigate this complex but rewarding process.

Benefits of Chapter 11 Bankruptcy

If your business is only experiencing a temporary downturn due to fluctuating market conditions or other factors, you will want to do everything possible to protect the business’s long-term health as you pursue short-term debt relief. A successfully handled Chapter 11 bankruptcy confers numerous benefits that can help get a distressed business back on track.

Filing for Chapter 11 bankruptcy allows a business to:

  • Freeze collections actions. Like with consumer-oriented bankruptcies, Chapter 11 bankruptcies prevents and halts all imminent or ongoing creditor actions. This means your business can avoid evictions or foreclosures from commercial leases, bank levies, property seizures, and payment requests, among other things.

  • Maintain control of business operations. In consumer bankruptcy, a trustee is typically appointed to take temporary control of the filer’s assets. In a Chapter 11 bankruptcy, control of the company remains with the company, allowing it to more or less continue its normal operations for the duration of the bankruptcy process. This minimizes disruptions and secures your and your partners’ leadership roles.

  • Receive debt relief. In exchange for either a reorganization or sale of certain assets, the business will be entitled to either discharge certain debts or renegotiate terms with creditors.

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Chapter 11 Bankruptcy for Small Businesses

Chapter 11 bankruptcy can be a costly and time-consuming process. This means it is often incompatible with the realities of running a small business.

Subchapter V of Chapter 11 of the Bankruptcy Code was enacted in February of 2020 and can offer critical support and debt relief to small businesses. Subchapter V allows small businesses to pursue reorganization and restructuring of debt through an expedited process with fewer costs. The team can help you explore this option and whether it is likely to get you the relief you need.

Chapter 11 Bankruptcy for Individuals

Although Chapter 11 is primarily utilized by businesses, under certain circumstances, an individual can benefit from filing a personal Chapter 11. Generally, an individual (or married couple) will utilize Chapter 11 when Chapter 7 bankruptcy or Chapter 13 bankruptcy are viable solutions.

Such situations can arise when an individual has an especially high income or valuable assets that they wish to protect.

Individuals may also seek a Chapter 11 bankruptcy if they have more debt than a Chapter 13 filing allows. They might also require a longer repayment period than a Chapter 13 bankruptcy can facilitate.

Chapter 11 bankruptcy is not ordinarily an individual’s first choice for a bankruptcy filing. However, when appropriate used, it can provide significant relief and solutions to complex financial situations.

The Chapter 11 Bankruptcy Process

After filing for Chapter 11 bankruptcy, the distressed business gets immediate relief from creditors thanks to the halting of all collections actions. In the ensuing weeks, company leadership will need to propose plan for dealing with its outstanding debt and creditors. This will typically involve restructuring the business’s finances

Chapter 11 restructuring plans can be as varied as the business entities that file them. Under certain circumstances, a business entity can sometimes shed itself of unsecured debt, while retaining assets and continuing operations. Under other circumstances, a business may propose to downsize and/or sell off certain assets, while proposing to repay necessary creditors.

The business’s plan must be approved by the Bankruptcy Court and will be evaluated based on the following factors:

  • Good Faith. The business must be acting in accordance with the Bankruptcy Code and make no attempt to break or subvert any relevant law or regulation.

  • Feasibility. The plan must have reasonable odds of success. Creditors and the Court will object to plans that have logical gaps or are incompatible with the company’s available resources.

  • Best Interests of Creditors. In order to satisfy this provision, a plan must demonstrate that it would ultimately pay as much to creditors as they would have received in a Chapter 7 bankruptcy liquidation. In other words, you must demonstrate that the continued operation of the company and a partial repayment is as beneficial to creditors as a complete sale of the company’s remaining assets.

  • Fairness and Equitability. Secured creditors must receive at minimum the value of their collateral. Equity holders must discharge ownership rights unless the underlying debts are paid in full or new money is funneled into reorganization.

Every Chapter 11 bankruptcy is different and will need to be tailored to the practical needs and circumstances of the business. The Howell Chapter 11 bankruptcy attorney can help your company strategize on how best to approach your reorganization plan and ensure it meets all regulatory requirements.

Get the Relief You Need

The goal of a Chapter 11 bankruptcy is to help it weather adverse conditions and emerge in a more secure, sustainable financial position. The Howell Chapter 11 bankruptcy lawyer at Fedoroff Firm LLC can help you through each step of your filing, including working with your partners to develop a fair and equitable plan that will provide you the relief you need to succeed. The firm can also help you explore alternative uses to Chapter 11 bankruptcy, including filings for individuals and the newer Subchapter V expedited option for smaller businesses.