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Informational Bankruptcy Links

Chapter 11

Chapter 11 is typically used to reorganize a business, which may be a corporation, partnership, or sole proprietorship.

In Ch. 11 proceedings, the debtor prepares a feasible creditor repayment plan for court-supervised approval and enforcement. This allows the debtor to remain in possession of assets, continue business and re-emerge a profitable business entity.

A corporation exists separate and apart from its owners, the stockholders. The chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company's stock.
Like a corporation, a partnership exists separate and apart from its partners. The partners' personal assets may, in some cases, be used to pay creditors in the bankruptcy case or the partners, themselves, may be forced to file for bankruptcy protection.

A sole proprietorship (owner as debtor), on the other hand, does not have an identity separate and distinct from its owner(s). Accordingly, a bankruptcy case involving a sole proprietorship includes both the business and personal assets of the owners-debtors.

Creditors' committees can play a major role in chapter 11 cases. The committee is appointed by the U.S. trustee and ordinarily consists of unsecured creditors who hold the seven largest unsecured claims against the debtor. 11 U.S.C. § 1102. Among other things, the committee: consults with the debtor in possession on administration of the case; investigates the debtor's conduct and operation of the business; and participates in formulating a plan. 11 U.S.C. § 1103. A creditors' committee may, with the court's approval, hire an attorney or other professionals to assist in the performance of the committee's duties.

In chapter 11 (reorganization) cases, the discharge occurs upon confirmation of a chapter 11 plan.

 

Recent Chapter 11 Cases of Note

Chapter 11:

  • “Ride Through” Doctrine

 

Klein

  • Future Interests

Lee

  • Effect of Repeated Filings on Automatic Stay 11 USC §362

Bardwil

  • Motions to Value Collateral

 

Lee2

  • Employment Orders – Effect and Retroactivity

 

Holman

 

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