Los Angeles Chapter 11 bankruptcy attorneys at Weintraub, Selth & Nguyen, APC are prepared to assist you. As a business owner, you may have questions about bankruptcy that only experienced lawyers can answer. The Los Angeles Chapter 11 bankruptcy attorneys of Weintraub, Selth & Nguyen, APC have been helping business owners like you through the Chapter 11 reorganization process for several decades and our attorneys are ready to answer all of your questions. When you contact us for a free and no obligation consultation, our Los Angeles Chapter 11 bankruptcy attorneys will go into more detail about the business bankruptcy timeline. Below is a brief overview:
- When you file for business bankruptcy protection under Chapter 11, you have up to 120 days to submit a plan of reorganization to the court. Typically this plan includes precise details on how you plan to restructure your business debt. Your plan may involve repayment extensions, adjustments to interest rates, or debt relief. Our attorneys can help you formulate a plan and submit the proper documentation for this complex process. We can also answer all of your questions about bankruptcy and guide you through the process from start to finish.
- Once we help you develop a plan and it is proposed, the plan must be approved by a majority of the creditors and confirmed by the court. The bankruptcy court will also determine the feasibility of any proposed reorganization plan.
After the 120-day period has passed, any interested party may file a competing reorganization plan with the court. Such competing plans often include provisions for the liquidation of some of the debtor’s nonexempt assets. This plan may also be considered and approved by the court. These interested parties may include creditors or stockholders, and if a trustee is appointed, the trustee may also file a bankruptcy plan. Such plans often include provisions for the liquidation of some of the debtor’s nonexempt assets and may also be considered and approved by the court.
- The bankruptcy trustee has the ability to organize the interested parties who do not fall into a category of secured creditors into an “official committee of unsecured creditors.” The trustee may also create committees for secured creditors, holders of liens, or even for employees of the business. While any of these interested parties may file a competing reorganization plan, there is no guarantee their plan will be confirmed by the court. At every step of this process, you may have questions. We have decades of experience in this area of the law and have helped countless businesses emerge from bankruptcy.
- If the reorganization plan you originally proposed was developed with the expertise of a Los Angeles business bankruptcy attorney, your odds of a successful confirmation increase dramatically. There are many key points and numbers that figure prominently in any bankruptcy reorganization plan; consulting a qualified business bankruptcy lawyer is a sound business decision.
If the Reorganization Plan is Rejected
With our skilled Los Angeles business bankruptcy attorneys on your side, you will greatly improve your chances of having your plan approved. However, in some business bankruptcy cases, one or more classes of creditors will reject the reorganization plan. There are many reasons why a creditor may object to the proposed plan including:
- Arguing that the debtor does not meet the technical requirements of a Chapter 11 filing
- Challenging the valuations made by the debtor in the proposed plan
- Lack of detailed financial projections to determine the success of the plan
If you cannot come to an agreement with the creditors who object to the plan, you may seek relief under the cram down provisions of the bankruptcy code. This scenario allows a plan previously rejected by one or more creditors to be approved by the bankruptcy court as long as it is deemed to be fair, equitable and not discriminatory against any class of creditors. Our Los Angeles business bankruptcy attorneys can assist you with this step if it becomes necessary.
Confirmation and Completion of a Chapter 11 Bankruptcy Reorganization Plan
Once the reorganization plan is proposed and confirmed, you will be discharged from all debts filed in the plan. Following confirmation, the debtor’s property is free and clear of liens and encumbrances unless they were preserved in the plan documents. The terms of the confirmed reorganization plan, including any repayment conditions, must be adhered to by both the debtor and the creditors. Your chances of getting your initial plan confirmed increase exponentially if you have the right Los Angeles Chapter 11 attorneys working with you. From the start of the process until it has ended, we can position you for successful completion.
Goals of Chapter 11 Bankruptcy
We have been Los Angeles bankruptcy attorneys for the last several decades. While we know every business is unique and every situation requires legal advice that is tailor-made for that particular situation, we are also aware of the common concerns that many business owners have including: when should I file for Chapter 11 bankruptcy? How long will the process take? What are my options for emerging from bankruptcy? How can my business re-establish credit as quickly as possible?
Chapter 11 Bankruptcy has considerable benefits and may allow you to reap the following:
- Creation of a positive return for shareholders
- Ability to continue business operations
- Repayment to creditors
The reorganization of debt is one of the primary goals behind a Chapter 11 filing. To that end, a well-developed business reorganization plan is an essential element. Debts can be satisfied and the business can return to daily operations without the scrutiny of the creditors and the courts. With assistance from skilled and extremely experienced business bankruptcy attorneys, you may be able to settle your debts for fractions of what you owe. You will also dramatically improve the chances of your reorganization plan’s approval.
Seeking the advice of a qualified business bankruptcy attorney should be your first step. Choosing a lawyer who knows the process can help you return to the road of profitability sooner. Call the attorneys of Weintraub, Selth & Nguyen, APC for attorneys with decades of experience and a long history of success: (310) 878-4399.
The Chapter 11 Bankruptcy Process and how a Business Bankruptcy Attorney can Help
As you move through the Chapter 11 process, the goals for your business will become more defined. In general, these outcomes are what many businesses strive for:
- Developing a plan of reorganization that sets new terms and conditions between the business and its creditors
- Significantly reducing the debt load of the business and restructuring the remainder of the debt
- Creating a new debt repayment plan that incorporates longer maturity dates and more favorable interest rates
Accomplishing these goals sets the business up to return to profitability and avoid liquidation. This is a win-win situation not only for the business owner, but also for creditors who can see a clear path to repayment.
Negotiation with creditors is a delicate process best left in the capable hands of a seasoned small business bankruptcy attorney. Many creditors welcome a capable negotiator who is knowledgeable and professional. Not only does having such a negotiator on your side assist you with creditors, but hiring an experienced lawyer provides you with the best representation of your case in front of the bankruptcy court. Furthermore, having us on your side allows you to focus on your newly restructured business.
Business Bankruptcy Frequently Asked Questions
Can I continue to operate my business through bankruptcy?
Depending on the type of business bankruptcy you file, the answer is often “yes.” Chapter 11 enables business operations to continue after the bankruptcy is filed. Chapter 11 is available to individuals and to businesses.
We have represented innumerable clients in Chapter 11. Many have been individuals and many others have been business entities. For individuals, Chapter 11 may be most suitable for people with significant debt but who also have significant equity in assets, such as their home or their business, which they wish to preserve. For businesses, Chapter 11 is intended to enable a transition from pre- to post-bankruptcy operations, though special financial reporting is required of businesses in Chapter 11. Essentially, they are required to provide a profit/loss statement and cash report each month. Because a business in bankruptcy does not pay its pre-bankruptcy creditors until the court permits it to do so (typically many, many months later), cash flow often improves immediately. In contrast to Chapter 11 for businesses, Chapter 7 liquidates the business assets and the operations do not continue.
How will bankruptcy impact my business?
If you intend to continue operations through a bankruptcy, obtaining credit may be more challenging. Trade creditors are often less willing to provide credit to a business once bankruptcy is filed. However, there are many, many exceptions. Often, trade creditors are willing to provide new credit because they are entitled to priority status as a result of post-bankruptcy sales. As far as suppliers are concerned for your business, our attorneys have devised multiple strategies designed to help maintain relationships with suppliers. In addition to, perhaps, seeing differences in how you access credit and get supplies for your business, you will also have additional administrative tasks if you file Chapter 11 and maintain your business operations. You may need to open new bank accounts and also provide a monthly profit and loss statement and cash report to the Office of the United States Trustee. Of course, there is also the burden imposed as a result of legal fees incurred in connection with a Chapter 11 case. Our firm has devised a creative way of easing this burden for our clients.
How does one exit from bankruptcy?
In a Chapter 11, the business or individual “exits” from bankruptcy by confirming a plan of reorganization. The plan establishes new contractual relationships between the entity in bankruptcy and its creditors. As an example, if a bank loan requires monthly payments of principal and interest at a rate of 8 percent with maturity in three years, the bankruptcy plan may provide for interest-only payments every six months, with a balloon payment in seven years. In Chapter 7, the individual or business liquidates assets, negotiates a settlement with creditors and the bankruptcy trustee facilitates the transferring of proceeds to creditors who have agreed to the terms. This process may take several months. In Chapter 13, the debtor and the creditors agree to a repayment plan for, typically, a significantly reduced amount of debt. The repayment plan usually lasts between three and five years.
What are my rights as a property owner if a tenant files for bankruptcy?
If one of your tenants files for bankruptcy, you are generally entitled to the tenant’s full performance under the lease. However, the bankruptcy filing has a significant impact on your rights to collect. As an example, you may not undertake any enforcement action for breaches in the lease without the express permission of the bankruptcy court – this includes the commencement of an unlawful detainer action. Landlords are well advised to contact bankruptcy counsel immediately upon learning that a tenant has filed for bankruptcy relief. Through early intervention, the landlord is often able to better protect his or her rights. An experienced attorney can monitor the bankruptcy case closely and file appropriate documentation and meet all deadlines so that you can pursue what is yours while adhering to the requirements of the bankruptcy proceeding.
The Chapter 11 bankruptcy process is complicated for people unfamiliar with its intricacies. The process is best navigated with the help of a seasoned lawyer on your side. Call our law firm today for a free consultation and for the peace of mind that comes from having an experienced Los Angeles Chapter 11 attorney on your side.