Filing for Chapter 11 Bankruptcy in Woodbury, CT
What is Chapter 11 Bankruptcy?
Every client has unique needs. In some cases, Chapter 11 bankruptcy is chosen over Chapter 7. Chapter 11 is more commonly used by corporations who have acquired large amounts of debt and are in need of restructuring. With a Chapter 11 bankruptcy the debtor is not required to liquidate all it’s assets and is still able to operate the business. The restructuring is designed to create a stronger business that is capable of repaying creditors. Once the court approves the filing, the company can resume their operations. This should allow for the repayment of some debts, while others may be dismissed.
Chapter 11 bankruptcy is most common for larger companies in the Woodbury area however, in some cases it may still be utilized by smaller companies and even individuals in need of filing for bankruptcy.
How Does Chapter 11 Work?
Once it has been determined to file for Chapter 11 bankruptcy a petition must be filled out to start the process. Petitions can be acquired at a bankruptcy court serving the Woodbury area. Chapter 11 bankruptcies may be filed voluntarily by the debtor or involuntarily by the creditor. A disclosure statement must also be filed with information regarding finances. The information requested will include:
- History of debt
- Collection of assets and liabilities
- Documents proving current income and expenditures
- A full list of executory contracts or unexpired leases
- Statement including current financial affairs
It is essential that the debtor has a plan to reorganize and create better cash flow in order to repay creditors. Chapter 11 offers the debtor this ability to restructure while the creditors stand by and wait.
Confirming the Plans for Chapter 11
After careful planning and restructuring, your Woodbury business will need to have approval of their plan to reorganize. Some things to consider in creating this plan are:
- Feasible: Careful consideration of potential success of the plan is necessary. Are the benchmarks in this plan feasible?
- Best Interest of the Creditors: Making good on loans must be the first priority in the restructuring plan. The creditors should be paid similar amounts as in a liquidation bankruptcy.
Once the Woodbury area court accepts the Chapter 11 plan, the debtor is then allowed to begin restructuring their finances and putting their plan in place.