- The company is receiving a large number of collection calls and/or collection
letters from collection agencies
- The company’s long-term revenues will be higher than the liquidation
value of its assets, allowing its creditors to get more money back if
they allow the company to reorganize and work out a payment plan
- The business owns real property that is underwater and would like to eliminate
(“strip off”) or reduce (“strip down”) secured
debts against the property
- The business is being threatened with, or is a current defendant in, Fair
Labor Standards Act lawsuits
- A judgment creditor is about to execute on its judgment lien
- A secured creditor is about to take back its collateral
- The entity needs to acquire new financing with more advantageous terms
- The business could profit from rejecting or canceling certain unfavorable contracts
How Chapter 11 Bankruptcy Works
The debtor-in-possession must submit a plan of reorganization for approval
by the creditors and the court. The plan organizes the company’s
debt into classes according to the type of debt. The plan sets forth how
the debtor-in-possession intends to pay its various creditors over the
term of the plan. The plan can provide that certain contracts are cancelled,
which can result in a substantial financial benefit to the company. The
debtor can also “avoid” certain payments made within the period
(usually 90 days) prior to the bankruptcy filing, resulting in the money
being returned to the company, for the benefit of all of its creditors.
A majority of the creditors and the bankruptcy court must approve the Chapter
11 plan. Once the plan is confirmed, the debtor-in-possession operates
its business while making payments to fulfill its obligations according
to the terms of the plan. The bankruptcy court continues to supervise
the Chapter 11 debtor’s business to ensure compliance with the plan,
for a limited period of time.
What Are the Duties of a Chapter 11 Debtor?
A Chapter 11 filing can be used to reorganize a large corporation, a small
business or it could be utilized on an individual basis.
The entity filing a Chapter 11 has certain fiduciary obligations, including:
- Accounting for property and assets
- Examining and objecting to claims of creditors
- Filing required reports, including monthly operating reports
- Obtaining court approval to employ professionals such as attorneys, accountants,
appraisers, auctioneers, or others, as needed, during the case
The office of the U.S. Trustee is responsible for monitoring the compliance
of the debtor in possession. Our attorneys work closely with the U.S.
Trustee’s Office and have established a good relationship and reputation
that benefits our Chapter 11 clients.
Utilizing The Small Business Reorganization Act of 2019
Our firm has a thorough understanding of
The Small Business Reorganization Act of 2019 and we can use our knowledge and experience to help you reorganize and
preserve your business during the bankruptcy process. We understand that
Chapter 11 bankruptcy can be a useful tool to help a struggling business
get back on track, and we want to use Subchapter V of Chapter 11 bankruptcy
for the benefit of your small business.
Talk to Our Experienced Miami Chapter 11 Lawyers
At Leiderman Shelomith Alexander + Somodevilla, PLLC, we appreciate our
relationship with you and protecting the going concern of your business.
You are not just a case or a file number to us. Let us help your business
obtain the debt relief it needs and provide a stable financial future.
Reach out to our
business bankruptcy attorneys in Miami today.
If you are interested in learning more about corporate Chapter 11 bankruptcy,
and if your business is located in Broward, Miami-Dade, Highlands, Indian
River, Martin, Monroe, Okeechobee, Palm Beach, or St. Lucie Counties,
contact us via
our online contact page.