Chapter 11 Bankruptcy
Whibbs & Stone, Attorneys at Law
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Chapter 11 Bankruptcy Lawyer in Pensacola

A Chapter 11 reorganization is available to individuals and businesses. Due to the higher court fees, reporting requirements and legal fees involved in a Chapter 11, it is seldom used by individuals. However, it may provide individuals and businesses with an opportunity to reorganize their debts and make arrangements to pay all or a portion of the debts or sell the business, while obtaining protection from creditors.

At the Law Offices of Whibbs, Stone & Barnett, P.A., we have extensive experience helping businesses and individuals by developing the right solution when they are facing financial difficulties. Our lawyers have handled numerous cases for our clients who have had to file for Chapter 7, Chapter 13, or Chapter 11 bankruptcy. We have an in-depth understanding of the various bankruptcy options, the differences between each, and which type of bankruptcy (if any) is the best course of action based on our clients’ specific circumstances. 

Chapter 11 Bankruptcy in Florida

Chapter 11 reorganization is used mainly by corporations, limited liability companies (LLCs), partnerships, and other business entities that are deep in debt. In some cases, the debt a business carries can be managed in a different way, such as through negotiation with creditors. But when the debt load is such that it impinges on the company’s ability to do business, bankruptcy might be the only way out. 

The main advantage in choosing Chapter 11 bankruptcy over Chapter 7 bankruptcy is that it allows the company to continue operations, restructure and reorganize, and if all goes as planned, recover from their financial difficulties. Under Chapter 11, you can continue to do business while under the supervision of the court. 

The business keeps all of their assets and receives protection from the court against collection activity from creditors. While this is happening, the filer is responsible to propose a plan for handling their debt and recovering financially. This plan may include restructuring or canceling certain debt obligations when the current debt structure is too much of a financial burden.

A Chapter 11 bankruptcy case begins when a petition is filed along with an administrative fee and case filing fee by the business or individual in a local Florida bankruptcy court – usually where their residence or primary place of business is located. Along with the petition, the filer submits “schedules” for their income and expenses, assets and liabilities, leases and contracts, and other financial information. 

Once a reorganization plan is submitted by the filer, it is voted on by the creditors and presented to the bankruptcy court for approval. The bankruptcy court considers the input of creditors and other parties in deciding how to proceed. Once the court approves the plan, the business can begin resolving its debts while continuing normal operations.

In most cases, the business is allowed to maintain control over operations without the appointment of a bankruptcy trustee. However, there are some instances in which a bankruptcy court may decide to take over control of the business if it finds sufficient cause to do so. Examples of sufficient cause may include incompetence, gross mismanagement, dishonesty, and fraud.

While the business usually stays in control of normal day-to-day operations during a Chapter 11 bankruptcy, there are areas of operation that are restricted by the bankruptcy proceeding and require court approval. These have to do with major decisions a business may make, such as:

  • Buying or selling of real estate and other property and assets (not including inventory);
  • Taking on additional debt after the bankruptcy case has been filed;
  • Entering into or breaking a commercial lease;
  • Shutting down some area of operation or expanding into a new area;
  • Entering into or modifying major contracts and agreements.

Once the business has fulfilled the terms and conditions of the reorganization plan by repaying its creditors as agreed, the case can be closed, and the business can take back unfettered control. All in all, the Chapter 11 bankruptcy process usually takes several months or longer to complete. The shortest cases may be wrapped up in just a few months, while the most complicated cases can go on for several years. There is no hard time limit on the duration of a case, and the timeline will be different for each case depending on the filer’s specific circumstances.

It is important to note that although most Chapter 11 bankruptcy cases are voluntary (as in, they are filed voluntarily by the debtor), there are some instances in which creditors might get together to initiate an involuntary bankruptcy against a debtor that is in serious default. To initiate an involuntary bankruptcy action, a debtor must have a certain amount of debt, and other requirements must be met. The main purpose of an involuntary bankruptcy is to give the creditors an avenue to recover at least some of the outstanding debt that is owed to them when it looks like there are no other alternatives for collecting.

When Does it Make Sense for an Individual to File for Chapter 11?

As we’ve discussed previously, both businesses and individuals can file for Chapter 11 bankruptcy. But for individuals, there is more than one bankruptcy option that allows them to reorganize and restructure debt. So, when an individual wants to exercise this option, it will come down to a choice between Chapter 11 and Chapter 13 bankruptcy.

These two chapters of the bankruptcy code work similarly, but if an individual qualifies, it is usually more beneficial to choose Chapter 13 bankruptcy (although this may not always be the case). However, if an individual has debts that exceed the maximum than is allowed to qualify for Chapter 13, then Chapter 11 may be their only alternative. 

Contact an Experienced Florida Chapter 11 Bankruptcy Attorney

When you are facing financial struggles, you need a lawyer who knows the different options that are available and can help you choose the path that best makes sense for your situation. In some cases, the right choice might be Chapter 11 reorganization. Chapter 11 bankruptcies are very complicated, and they require the guidance of skilled legal counsel to successfully navigate the complexities of the process.

At the Law Offices of Whibbs, Stone & Barnett, P.A., we will work closely with you to thoroughly assess your specific circumstances and to help determine if Chapter 11 reorganization is the right course of action for you, or if there is a better alternative. Whichever path you ultimately choose, we will be there to serve your legal needs in whatever capacity you need us.

Call our office today at 850-500-1111 or send us a message through our online contact form to schedule a free consultation with one of our attorneys. You may also stop by our Pensacola office in person at your convenience.

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