What Should My Business Include in a Chapter 11 Bankruptcy Plan?
Chapter 11 is the most commonly filed type of reorganization bankruptcy for businesses, and it is also the type of bankruptcy that individuals file when their debts are too high to qualify for Chapter 13 bankruptcy. Like other forms of reorganization bankruptcy, Chapter 11 bankruptcy cases require various kinds of information in conjunction with the filing of the bankruptcy petition, including both a disclosure statement (concerning assets and liabilities) and a plan of reorganization. To be clear, if your business is considering a Chapter 11 bankruptcy filing, you will need to work with an attorney on a proposed reorganization plan. While the court may require revisions to the plan of reorganization that is initially filed, businesses should take all steps ahead of time to ensure that the reorganization plan will be successful.
What does your business need to include in its reorganization plan? While Chapter 11 reorganization plans should be crafted on a case-by-case basis with assistance from a lawyer, the following information from our West Palm Beach bankruptcy attorneys clarifies key content for any reorganization plan.
Disclosure Statement
Chapter 11 reorganization plans must be filed with a disclosure statement, which is a document that will detail the debtor’s assets and liabilities, various details about the business, and other information designed “to enable a creditor to make an informed judgment about the debtor’s plan of reorganization.” The business’s creditors must have all of this information because any creditors who are considered “impaired” (creditors “whose contractual rights are to be modified,” according to the US Courts, or who will receive less than the total value of their claims based on the debtor’s proposal) will vote on the proposed plan of reorganization.
Classification of Claims and Their Treatment
All reorganization plans must include a classification of all claims held by creditors (including whether those claims are secured or priority claims). The plan must also “specify how each class of claims will be treated under the plan,” according to the US Courts.
In other words, your business will need to provide detailed information about all creditors and their respective classes, and how those claims will be handled in the proposed reorganization plan. For instance, does the proposed plan alter an original agreement with a secured creditor? Or, for example, are there nonpriority unsecured debts that your business proposes paying only in part over the course of the plan, and seeking a discharge for the remaining amounts? Your business will need to explain how these creditors will be treated in the plan.
Contact a West Palm Beach Bankruptcy Attorney Today for Assistance
Any business that is considering a Chapter 11 bankruptcy filing or another type of reorganization bankruptcy should seek advice about the details of the repayment plan and all other components of the bankruptcy case from an experienced attorney. Bankruptcy filings, and business bankruptcies in particular, are extremely complicated. It will be critical to ensure that the repayment plan meets all requirements and that the business remains in compliance with all other requirements of US bankruptcy law during the bankruptcy case. One of the experienced West Palm Beach bankruptcy lawyers at Kelley, Kaplan & Eller can speak with you today about your business’s reorganization bankruptcy plans, and we can provide you with more information about how we can assist you. Contact our firm today.
Sources:
law.cornell.edu/uscode/text/11
uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
