Source: https://hallnavarro.com/georgia-bankruptcy-lawyers/chapter-11/
Timestamp: 2020-08-09 08:50:00
Document Index: 9906975

Matched Legal Cases: ['§ 1183', '§ 1141', '§ 1141', '§ 1141', '§ 523', '§ 1141', '§ 362', '§ 1141', '§ 1192', '§ 1192', '§ 1141', '§ 503', '§ 523', '§ 362', '§ 118', '§ 1191', '§ 1186']

Georgia Chapter 11 Bankruptcy Lawyers | Statesboro and Springfield
Georgia Chapter 11 Bankruptcy Lawyers
Are you feeling overwhelmed because your business is struggling financially? Debt in business can make life very stressful for a lot of people. Our Georgia Chapter 11 bankruptcy lawyers want to help you make the transition from this life full of stress to a brighter future with fewer worries. Call us today to get started.
What the Debtor Who Can File Chapter 11 Bankruptcy Should Know
There are three types of Chapter 11 bankruptcies presently. There is the normal Chapter 11; there is the small business case; and as of February 19, 2020, a subchapter V case. Each Chapter 11 case has different requirements and procedures. All are for the rehabilitation of a business that is having cash flow problems.
A subchapter V Chapter 11 is a voluntary election by the debtor. This case resembles a chapter 12 or 13 case is some ways. It provides for a trustee to generally oversee the business but leaves the debtor in possession of the assets and control of the business. In some cases, the trustee may make distributions to creditors. The debt limitation presently is $7,500,000 under the CARES Act. Normally the debt limitation is $2,725,625. This bankruptcy attempts to expedite bankruptcy and reduce administrative expenses. Debtors must file plans of reorganization within 90 days of the bankruptcy filing. There is no disclosure statement to prepare and pay for. No administrative fees are paid to the United States Trustee. Most importantly for small businesses there is no requirement the principals of the debtor have to fund the purchase of shares in the business. In other words, the subchapter V eliminates the “absolute priority” rule (owners can retain their equity in a Subchapter V small business over the objection of a class of unsecured creditors, without paying those creditors in full). A more complete discussion of subchapter V cases is covered below.
The same debt limitation is applicable in a “small business case”. If the debtor business has debt less than $2,725,625 it is deemed a small business case if no election is made to be a subchapter V case. A small business case (‘SBC”) has additional filing requirements such as financial statements within seven days of filing. Only the debtor may file a plan in a SBC within 180 days of the bankruptcy but must file a plan within 300 days or the case will be dismissed or converted to chapter 7. The disclosure statement may be conditionally approved without a separate hearing as is required in a normal chapter 11.
As would be expected most chapter 11’s will fall into the two above categories. If the case is a single real estate asset case, neither SBC nor subchapter V is available. The remaining option is a normal chapter 11 case. In this chapter 11 the debtor has 120 days in which you, as the debtor, can file your Chapter 11 bankruptcy. It is an exclusive right in which you can file your plan to repay or reorganize your debt to the creditors. The court can grant an extension or even reduce this time, if it deems fit to do so. The amount of time it can extend it, however, is capped at 18 months. As soon as this time limit has ended, which could be somewhere between 120 days or 18 months, the creditors may file a competing plan if they choose to do so..
All bankruptcies require:
To confirm any plan of reorganization, the debtor must satisfy the so-called Best Interest Test by providing creditors at least as much as they would receive if the debtor were liquidated and not reorganized.
Secured creditors retain the right to make an election under section 1111(b)(2) of the Bankruptcy Code to have the entire amount of their claims remain secured by their collateral, while receiving altered payment terms under the Plan. The effect of a section 1111(b)(2) election is to secure for the secured creditor any post-confirmation increase in the value of its collateral effectively upon its sale, at the expense of receiving payment on the unsecured deficiency part of its claim under the debtor’s confirmed plan of reorganization.
Secured creditors retain their rights to have their collateral “adequately protected” against diminution in value or be granted relief from the Bankruptcy Code’s automatic stay to realize on their collateral.
To assume executory contracts, i.e., leases debtors must still cure defaults and, where required, provide adequate assurance of future performance.
Do note that Chapter 11 could continue to go on for several years. The ones who have the power to make sure that the case is resolved in a timely manner are the court, the trustee of the case, and the committee working on the case. If you have any questions at all about what you should be preparing for, please call our Georgia Chapter 11 bankruptcy lawyers right away.
Chapter 11 bankruptcy is a way to reorganize your debts and assets. You will be looking to gain a fresh start with Chapter 11. It can be very complex and you should absolutely precede with the help of one of our Georgia chapter 11 bankruptcy lawyers.
Likely the filing of Chapter 11 is going to allow for a business to continue operating. Historically, there have been several large businesses that have continued to operate during a Chapter 11 bankruptcy such as K-mart, United Airlines, General Motors and so on. Chapter 11 is not just for huge businesses. It can help any size business. It is very rare to see an individual person file for Chapter 11 bankruptcy but it is not unheard of when someone has a lot of debt but doesn’t qualify for Chapter 7 or 13.
When bankruptcy is being considered, note that this must benefit the creditors who have loaned money.
Whether you are filing Chapter 11 bankruptcy for your business or as an individual, you as the debtor are going to be able to propose a plan to reorganize your debt first. You may show that you will downsize some of your business, which would reduce costs and so on. It also may include liquidating some of your assets in order to pay back some of the debt to your creditors. The court may accept the plan as you made it, if they see it playing out well. If not, it will be made for you.
Call Our Georgia Chapter 11 Bankruptcy Lawyers Today
If you are struggling and worried about your future, please know we are here to guide you through your Chapter 11 bankruptcy. This is a challenging time and we aim to take some stress away from you. Please do not hesitate to reach out to our Georgia Chapter 11 bankruptcy lawyers.
Key Features of Subchapter V
Court may confirm a plan even if all classes reject it. A plan may modify a claim secured only by a security interest in the debtor’s principal residence if the new value received in connection with the granting of the security interest was not used primarily to acquire the property and was used primarily in connection with the small business of the debtor. Such modification is not permitted in standard or non-sub V chapter 11 cases or in chapterl2 or 13 cases. (Section VII(B)).
Disposable Income. As in a chapter 12 or 13, in a Subchapter V case, as long as unsecured creditors are to be paid the debtor’s “disposable income” for a period of three years (or up to five years if extended by the court), equity holders will continue to own and manage their business, even where creditors all vote against the plan and object to confirmation. Disposable income includes income that is reasonably necessary to be expended “for the payment of expenditures necessary for the continuation, preservation, or operation of the business of the debtor” which would include salaries to the owners.
No Disclosure Statement Requirement. A chapter 11 disclosure statement is normally not required in Subchapter V. Elimination of the disclosure statement reduces costs significantly and expedites the plan confirmation process. The chapter 11 plan itself, however Continued Ownership and Management. Non-consensual plan confirmation in Subchapter V differs radically from the “cramdown” rules of traditional chapter 11 cases. Under the absolute priority rule in non-Subchapter V cases, existing owners cannot retain equity in the debtor over the objection of a class of unsecured creditors, unless the class is paid in full or the owners contribute new capital into the company.
The, must contain a brief history of the debtor’s business operations, a liquidation analysis, and projections with respect to the debtor’s ability to make plan payments.
No Competing Chapter 11 Plans. Only a debtor may file a chapter 11 plan in a case under Subchapter V.
Delayed Payment of Administrative Expense Claims. In contrast to a traditional chapter 11 case, where administrative expense claims have to be paid on a plan’s effective date or in the ordinary course of business, a small business debtor in Subchapter V may stretch out payment of administrative expense claims over the term of the chapter 11 plan.
90 Days to File A Plan. Subchapter V debtors are required to file a plan not later than 90 days after entering bankruptcy, unless the need for the extension is caused by circumstances “for which the debtor should not justly be held accountable.”
Appointment of a Specialized Trustee. Management of the debtor’s affairs remains with the debtor, although one or more Subchapter V trustees are appointed for all Subchapter V cases in each U.S. Trustee region to monitor the debtor’s affairs, evaluate the debtor’s assets, assess the debtor’s prospects for success, and make recommendations regarding confirmation of the debtor’s plan. See 11 U.S.C. § 1183(b). In a non-consensual plan confirmation, the trustee collects and distributes plan payments.
Required status conference and report from debtor. The court must hold a status conference within 60 days of the filing “to further the expeditious and economical resolution” ofthe case. Not later than 14 days before the status conference, the debtor must file a report that details the efforts the debtor has undertaken and will undertake to achieve a consensual plan of reorganization.
Discharge. If the court confirms a consensual plan, a sub V debtor (including an individual debtor) receives a discharge under § 1141( d)( 1 )( A) upon confirmation. The provision in § 1141( d)( 5)for delay of discharge in individual cases until completion of payments does not apply in a sub V case. In the case of an individual, the § 1141(d)(1)(A) discharge does not discharge debts excepted under § 523(a). § 1141(d)(2). One effect of the grant of the discharge is that the automatic stay terminates under§ 362(c)(2)(C). If the court confirms a cramdown plan,§ 1141(d) does not apply, and confirmation does not result in a discharge. Instead, new § 1192 provides for a discharge, which does not occur until the debtor completes plan payments for a period of at least three years or such longer time not to exceed five years as the court fixes. Under new § 1192, the discharge in a cramdown case discharges the debtor from all debts specified in § 1141(d)(l)(A) and all other debts allowed under§ 503 (administrative expenses), with the exception of: (1) debts on which the last payment is due after the first three years of the plan or such other time not exceeding five years as the court shall fix; and (2) debts excepted under§ 523(a). Under § 362( c )(2), the automatic stay remains in effect after confirmation of a cramdown plan until the case is closed or dismissed, or the debtor receives a discharge.
Property of the Estate. Section 1115 provides that, in an individual chapter 11 case, property of the estate includes assets that the debtor acquires postpetition and earnings from postpetition services. Section 1115 does not apply in a subchapter V case. New § 118l(a). If the court confirms a plan under the cram down provisions of new § 1191(b ), however, property of the estate includes (in cases of both individuals and entities) postpetition assets and earnings. New § 1186(a).
Operating business to file Chapter 11 bankruptcy
Resolving Disputed Claim in Chapter 11 Bankruptcy
Choosing an Attorney for Chapter 11 Bankruptcy
After filing Chapter 11 Bankruptcy
Goal of Chapter 11 Bankruptcy
Preparing for Chapter 11 Bankruptcy
Who May File Under Chapter 11 Bankruptcy
Why a Company files Chapter 11 bankruptcy