Will Our Business Have to Liquidate Assets in a Chapter 11 Bankruptcy?
One of the major concerns that business owners and individuals alike have when they are considering a bankruptcy filing is whether they will end up losing assets. In other words, will your assets have to be liquidated in order for you to obtain bankruptcy protections? With reorganization bankruptcies, the answer is no. While many business owners assume that liquidation is a standard component of bankruptcy, this is only true for liquidation bankruptcies that are filed under Chapter 7. Much differently, in a Chapter 11 bankruptcy or another type of reorganization bankruptcy, you will not have to liquidate assets. Our West Palm Beach business bankruptcy lawyers can explain in more detail below, and we can speak with you today about your business’s bankruptcy plans.
No Liquidation of Assets Required in a Chapter 11 Bankruptcy Case
Chapter 11 bankruptcy, as well as other types of business reorganization bankruptcy under Subchapter V or Chapter 12, for example, does not require the liquidation of assets. Liquidation is not a primary component of reorganization bankruptcy as it is in a Chapter 7 bankruptcy.
Instead, in a Chapter 11 bankruptcy, a business will create a reorganization plan that involves repaying secured and priority unsecured creditors in full over a particular length of time, as well as repayment of nonpriority unsecured creditors in part based on the business’s finances. To be clear, assets are not liquidated in order for creditors to be repaid in full or in part. Instead, the debtor repays creditors over time according to the terms of the repayment plan, which can last anywhere from six months to a number of years in a Chapter 11 bankruptcy case.
Can My Business Choose to Liquidate Some Assets in a Reorganization Bankruptcy?
The liquidation of assets is not required in a Chapter 11 bankruptcy. However, in some cases, the debtor might want to sell some assets. If there is a reason that your business would benefit from selling certain business assets — that is, choosing to sell particular business assets — during your reorganization, you may be able to do so under Section 363 of the Bankruptcy Code.
For some businesses, planning to sell specific assets may be part of their reorganization plan or may be a way of raising capital during the reorganization and meeting the business’s needs. If your business wants to sell certain assets during your reorganization bankruptcy, you should discuss the details with a bankruptcy attorney in West Palm Beach to determine how this will work with your reorganization and repayment plan.
Contact Our West Palm Beach Bankruptcy Attorneys About Your Bankruptcy Plans
If your business is dealing with financial difficulties and considering options, it is important to speak with a business bankruptcy attorney in South Florida about your reorganization bankruptcy options. Filing for Chapter 11 bankruptcy or another type of reorganization bankruptcy can allow your business to remain open, to continue to operate, and to avoid any liquidation of assets that you do not want to sell while restructuring your business’s debt. An experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC can speak with you today about your business’s reorganization bankruptcy options, and we can begin working with you on your bankruptcy case.
Sources:
law.cornell.edu/uscode/text/11
law.cornell.edu/uscode/text/11/363
