Fremont Bankruptcy Attorney explains the Chapter 11 bankruptcy process
Fremont Bankruptcy Attorney explains the Chapter 11 bankruptcy process.
A Chapter 11 bankruptcy filing is similar to a Chapter 13 reorganization filing, except Chapter 11 is limited to businesses and individuals whose assets or unsecured debts exceed the Chapter 13 limits. Though both Chapter 11 and Chapter 13 bankruptcies have the goal of reorganization, for the debtor, the process can be very different.
In a Chapter 11 bankruptcy is difficult to predict precisely how long a it may take to get to completion because it is so dependent on the reorganization plan. The reorganization plan needs to be accepted by all the creditors as well as the trustee before it gets implemented. Depending the size and the complexity of the bankruptcy and the assets involved, debtors may come out of the bankruptcy within a few months, or it may take several years. The reason for the time discrepancies is because, at first, debtors have the exclusive right of proposing a plan within 120 days of the filing. After a certain amount of time, the creditors are then allowed to propose their plans for reorganization. The reorganization plan, whatever is chosen, needs to be confirmed by the bankruptcy court. The creditors then need to vote and approve the plan. If the plan is confirmed, then the debtor follows the repayment plan until the debt is completely paid. If the plan is not confirmed then the court looks to other options for the debtor. Some options include converting the Chapter 11 into a Chapter 7 and liquidating the assets. Or in some cases, dismissing the case, and returning the debtor back to whatever their status was before the bankruptcy. Therefore, the timeline is definitely different with each case depending on the assets involved and the difficulty.
