Arizona Chapter 11 Bankruptcy Lawyer

A chapter 11 bankruptcy is commonly used to reorganize a business. The structure of the business can determine if a chapter 11 bankruptcy is the right choice. Whether the business is an LLC, S-Corp, C-Corp, partnership or sole proprietorship, our experienced Arizona bankruptcy attorneys can assist you with a plan to go forward and reorganize.

Debtor-in-possession

Under chapter 11 bankruptcy, the debtor automatically assumes the role of "debtor-in-possession." This means the debtor will maintain conrol of its assets throughout the filing and a trustee is not appointed to oversee the assets. The debtor-in-possession will continue to operate the business and perform many of the functions that a trustee would perform in a chapter 7 or chapter 13 bankruptcy.

In the case of a non-business, individual debtor, chapter 11 is somewhat similar to chapter 13. The debtor's property and earnings acquired after the file date is property of the bankrupty estate. The debtor may fund the plan of reorganization with future earnings. Furthermore, if a creditor objects to a proposed plan, the plan cannot be confirmed with the court unless the debtor pays all disposable income over five years. The only way for the plan to go less than five years is if all unsecured claims are paid in full with interest.

Chapter 11 Plan and Disclosure Statement

In most cases, a Chapter 11 plan and disclosure statement must be filed with the court. The disclosure statement educates creditors on the status of the debtor's business affairs, assets, and liabilities enabling creditors to make an informed decision regarding the debtor's plan of reorganization.

The Chapter 11 plan of reorganization includes information on the classification of each creditor claim and how each class will be treated under the plan.  The creditors whose claims will be "impaired", meaning they will receive less than the full amount of their claim under the plan, will cast a ballot and vote on approval of the plan. After the disclosure statement is approved by the court and the creditor ballots are tallied, the court will hold a hearing to confirm the plan.

An Arizona Chapter 11 bankruptcy gives the debtor in possession many tools to restructure and reorganize its business. For example, a debtor in possession can acquire loans and financing on favorable terms and can also reject and cancel contracts.  

Chapter 11 Automatic Stay

The automatic stay protects the debtor from litigation against the business and any post-filing collection efforts. When the automatic stay is in place, most litigation against the debtor is put on hold until it can be resolved in the bankruptcy court or resume in its original venue.

Contact us to further discuss whether an Arizona Chapter 11 bankruptcy is the best option. Our Phoenix Chapter 11 bankruptcy lawyers can restructure your business debt to help ensure future cashflow and profitability.