Ocala, FL Chapter 11 Bankruptcy
Ocala Florida Chapter 11 Bankruptcy Law
FL Chapter 11 bankruptcy is a protection offered to businesses that are in financial distress. Functionally, Chapter 11 is very similar to Chapter 13 in that a repayment plan is devised to meet the company’s debt obligations. The primary difference is that Chapter 11 is geared towards businesses, not individuals, although there are a few instances in which an individual can file for Chapter 11 protections.
A consultation with a qualified Ocala Chapter 11 bankruptcy lawyer is the surest way to understand the process and your options, and they can help you determine if Chapter 11 bankruptcy is right for you.
Protecting Your Business With Chapter 11
Chapter 11 bankruptcy protection helps businesses remain in operation in times of overwhelming debt. Under Chapter 11, a business is able to restructure some of its debt, both secured and unsecured, to the point where the business can achieve financial growth and grow out of the remaining debt.
Typically, organizations that apply for Chapter 11 are still viable businesses that are making money but they have debt payments that are in excess of their net income or operating revenues. Chapter 11 is the only bankruptcy option that allows a business that is owned by a partnership, LLC or corporation to restructure and reorganize its debt and remain in operation. It is an expensive and time-consuming way to achieve financial stability, but for many companies it is a necessary step to take in order to preserve the business.
The Debt Reorganization Plan
A huge part of Chapter 11 is the debt reorganization plan. This is a court-approved plan to repay outstanding debts by reducing the company’s obligations to creditors and modifying the payment terms. The debt reorganization plan helps businesses reduce their debt load, balance income and expenses and, ideally, become a profitable business again. Most importantly, Chapter 11 allows the business to remain in operation while undergoing these changes.
Under the reorganization plan, creditors are separated into different classifications and the court decides how much money each creditor will be paid through the plan and the terms of the payments. This is often done over the objections of one or more creditors. Priority creditors are paid in full before junior creditors. Your Gainesville bankruptcy lawyer will be able to explain creditor rankings and classifications to you as every situation will be different.
Chapter 11 plans usually last 5 to 10 years, depending on the terms. During this time, the debtor will be required to allocate all of the business’s disposable income towards debt repayment. The Office of the United States Trustee will be assigned to oversee the process and the plan.
Usually several people are assigned to each case to review the debtor’s finances and ultimately make recommendations to the court, which may either be accepted or rejected by the court. The trustees in Chapter 11 cases are more concerned with making sure the creditors are treated properly and can be quite adversarial to debtors, which is why a Gainesville Chapter 11 bankruptcy lawyer is so important to have on your side.
Contact the law offices of Schatt, McGraw, Rauba & Mutarelli today for a NO COST initial consultation with a Florida Chapter 11 bankruptcy lawyer. Our expert staff can advise you of your options, explain the pros and cons of filing for Chapter 11 protections and help you understand the process and what’s involved in bankruptcy for businesses. Call us at (352) 789-6520 today and take the first step toward preserving your business.