Bankruptcy Lawyers in Jackson Heights, NY, Helping Businesses Reorganize Debts in Chapter 11
Many Americans tend to think of bankruptcy as synonymous with waving the white flag and giving up. But this is simply not the case. In addition to the fact that sometimes bankruptcy is the only real option available to some people in deep debt, there exist certain forms of bankruptcy which are more about the reorganization of debts and the repayment of money that is owed.
Chapter 11 is often referred to as the ‘reorganization bankruptcy’ and is a popular choice for large and small businesses that have suffered financial losses and taken on substantial amounts of debt. By filing for Chapter 11, a business may be allowed to remain in operation while they rearrange its debts and begin to repay debts to creditors. In recent years, big-name companies have gone through Chapter 11 bankruptcy, including JCPenney, GNC, K-Mart, General Motors, and Pier 1 Imports. Small businesses were hit especially hard by the pandemic, and many such businesses also had to file for bankruptcy.
If your business is struggling with insurmountable debts, you do have legal and financial options. One of those options may be Chapter 11 bankruptcy.
The bankruptcy attorneys of Ortiz & Ortiz, LLP have been assisting businesses in NYC for decades. To speak with a lawyer about your specific situation, please contact our law firm to schedule a consultation.
What Are the Six Chapters of Bankruptcy Code in the United States?
When people hear the word ‘bankruptcy’, they are typically thinking of Chapter 7, Chapter 11, or Chapter 13, as these are by far the most common. But there are actually six chapters in bankruptcy code.
The Different Chapters of Bankruptcy Code:
- Chapter 7: The most common and simplest form of bankruptcy is Chapter 7, the ‘liquidation bankruptcy.’ The debtor’s assets are liquidated in order to pay off creditors and any outstanding debts. Certain assets are exempt, however, so they will not lose everything.
- Chapter 9: This form of bankruptcy is reserved for municipalities, such as cities, counties, and school districts. The most famous recent example of Chapter 9 bankruptcy is when Detroit, MI filed in the summer of 2013.
- Chapter 11: The ‘reorganization bankruptcy’ is primarily used by businesses, but individuals can use it, too. It is among the most complex forms of bankruptcy.
- Chapter 12: This bankruptcy chapter is for family farmers and fishermen who have fallen on hard times and can’t get out of debt. It allows for the debtors to repay creditors over a three to five-year period.
- Chapter 13: After filing for Chapter 13, a repayment plan is agreed upon, by which the debtor pays back their debts over a certain period of time.
- Chapter 15: The newest chapter of bankruptcy code makes things easier in the world of international transactions. A foreign debtor who has to file for bankruptcy for properties and businesses in multiple countries may be most well served by filing for Chapter 15 bankruptcy, so that foreign courts and US bankruptcy courts can work in tandem.
What Are the Benefits of Filing for Chapter 11?
The biggest advantage of Chapter 11, compared to certain other forms of bankruptcy like Chapter 7, is that it allows the business to remain in operation while undergoing reorganization. That means it can continue seeing to the interests of shareholders, employees, and consumers even while in the bankruptcy process.
Chapter 11 bankruptcy also often comes with an automatic stay, which orders creditors to stand down and no longer pursue repayments while parts of the bankruptcy process are still pending.
Unless bankruptcy court determines that you are acting in a fraudulent manner, you should be allowed to oversee your own bankruptcy case. In cases of fraud or gross mismanagement, the court may appoint a trustee.
Are There Any Disadvantages to Chapter 11 Bankruptcy?
Chapter 11 isn’t cheap. While it may spread out your costs over time, the additional legal fees must also be added into consideration, and that can make it a very costly endeavor.
This is also commonly considered to be the most complicated form of bankruptcy.
Additionally, your creditors must sign off on your restructuring and repayment plans as you attempt to address your debts. If they do not approve of your plan, then it may not be allowed to proceed. If you cannot come up with a suitable plan, your creditors may suggest one for you.
For these reasons, please only consider Chapter 11 if it is reasonable for you to believe you have the ability to pay off these debts with a successful reorganization plan.
Contact the Law Firm of Ortiz & Ortiz to Schedule a Consultation with a NYC Bankruptcy Attorney
If you are a business or an individual and are considering the pros and cons of filing for bankruptcy, please reach out to our law firm. The lawyers of Ortiz & Ortiz, LLP have years of experience providing dedicated legal services to clients in and around Jackson Heights, NY. Whether your business is big or small, you do have options available to you, and we would be proud to sit down with you and discuss what some of those options might be.
To learn more about Chapter 11 bankruptcy law and how you may be able to achieve some relief from debt, please contact our law office to schedule a consultation with our legal team. We serve clients in Jackson Heights and all the five boroughs of New York City.
Call us at 917-540-9772.