Some debtors will convert to a Chapter 7 liquidation bankruptcy while others may end up with a Chapter 11 liquidating plan. C., has the business bankruptcy experience to represent your company in complex Chapter 11 filings.
If a liquidating plan may be in your company's future, you may wish to discuss your options with one of our knowledgeable Chapter 11 lawyers.
Not all businesses and individuals are able to successfully complete Chapter 11 bankruptcy.
When a reorganization plan is not approved by the creditors or the debtor is unable to repay its obligations, a liquidating plan may be the alternative.
Let’s start with a general overview of liquidation.
Liquidation (Chapter 7): With a “liquidation” bankruptcy, known as Chapter 7, the trustee sells the assets of the debtor and then uses the money to pay back the creditors as much as possible.
It's much more involved than Chapter 7 as it allows the firm the opportunity to reorganize its debt and to try to re-emerge as a healthy organization.
What this means is that the firm will contact its creditors in an attempt to change the terms on loans such as the interest rate and dollar value of payments.
In fact, with a Chapter 7 bankruptcy, a creditor that recovers even 25 cents on the dollar (a quarter of the money that is owed) is considered fortunate. Chapter 7 liquidation can be used by both individuals and by companies.That arguably makes reorganization more challenging. Prior to BAPCPA, a retailer could spend a year or more in bankruptcy.Now, significant time constraints place pressure on a debtor to move faster.The business owner may choose to retain control of the plan, but it is advisable to work with an attorney during this time.Our attorneys can assist you with all aspects of the liquidating plan, including the administration and distribution of assets to creditors.