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What is Chapter 11 Bankruptcy?

Posted on in Bankruptcy Attorney

Most people are familiar with Chapter 7 and 13 bankruptcies but may not have heard of a Chapter 11 bankruptcy filing. Primarily filed by businesses that are suffering severe financial losses, a Chapter 11 bankruptcy allows businesses to restructure their debts, rather than liquidate assets in order to pay off debts. Resembling Chapter 13 concerning repayment methods, Chapter 11 is also similar to Chapter 7. Businesses may be able to forfeit specific assets to repay creditors while being allowed to operate normally during the process of filing and completing bankruptcy proceedings.

The recession has devastated the financial conditions of many Illinois businesses over the past five years. This type of “reorganization” bankruptcy permits businesses of all sizes owing large sums of money to creditors the chance to stay in business and repay creditors at slower rates. However, Chapter 11 is much more complex than a Chapter 7 or Chapter 13 bankruptcy because of the decisions regarding what assets can be exempted from the forfeiture process. Further, if a company filing Chapter 11 is large enough to have stockholders, these stockholders are not at risk for having their assets forfeited.

Another aspect of Chapter 11 bankruptcy different from others is the regulation requiring some sole proprietors to sell personal assets in order to pay back debts. In certain cases involving individuals who have secured debts exceeding $1 million dollars or (and including) unsecured debts of more than $337,000, the ability to file Chapter 11 bankruptcy is also available. Additionally, those who file Chapter 11 in Illinois receive many more options regarding asset forfeiture and repayment schedules than those filing Chapter 7 and 11, a legal aspect that decidedly needs the expertise of a professional Chicago bankruptcy attorney.

If you own a business in Illinois that is experiencing financial difficulties, do not hesitate to contact a knowledgeable Chicago bankruptcy lawyer to discuss your options regarding Chapter 11 bankruptcy. It could save your financial standing and your business by allowing you to continue operating your business with minimal disruption in services. An experienced Chicago, Illinois bankruptcy lawyer is essential in any type of Illinois bankruptcy filing.

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