Filing for Chapter 11 Bankruptcy in Danbury, CT
What is Chapter 11 Bankruptcy?
For a case to be filed under Chapter 11 Bankruptcy, it is for the purpose of rearranging your Danbury business. It was created for the purpose of recognizing a large business with heavy debt seeking to restructure their debt. After being approved by the court, the business can redevelop its operations and create a plan to pay a fraction of the debts and dismiss others.
Filing Chapter 11 is common for for large corporations that want to reorganize their business from heavy debt burdens and avoid liquidation at any cost. Although it’s normally uncommon, individuals or smaller companies in Danbury can file for Chapter 11 in certain situations.
How Does Chapter 11 Work?
A Chapter 11 Bankruptcy case will usually begin with filing a petition with the closest bankruptcy court in Danbury. If the petition is voluntary, it will be filled out by the debtor. If it’s involuntary, then it may be filled by a creditor. Alongside filing for Chapter 11, a debtor must also file a disclosure statement that provides adequate information about financial affairs. This information can include:
- History of the debtor
- A Collection of assets and liabilities
- Documentation of current income and expenditures
- A list of any executory contracts or unexpired leases
- A statement of all current financial affairs
The debtor must also propose a plan to help trim any unnecessary costs as well as seek alternative sources for revenue or income. All of these changes and plans can be ongoing while keeping creditors at a distance.
Confirming the Plans for Chapter 11
In order to successfully reorganize a Danbury business, a debtor must have their plan accepted. The plan will include numerous requirements, but here is an example of some:
- Feasible: Will the plan succeed and will the debtor be able to obtain it? Over the term of the plan, the debtor must be able to cover the expenses. These also include payments to creditors.
- Best Interest of the Creditors: For a plan to be confirmed, it must meet the best interests of the creditors. This means that the creditors must receive a similar amount to that of a Chapter 7 liquidation case. Under certain requirements, this may require that the debtor pay in full.
After the acceptance of the Chapter 11 plan by the closets court to Danbury and by the creditor, the debtor will be free to reorganize any personal or business related finances.