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Chapter 11


What is Chapter 11 Bankruptcy?

Chapter 11 is often called the “reorganization bankruptcy.” It’s for businesses that want to keep operating but need time to restructure their finances in order to pay the bills.

Filing can be done voluntarily, or it can be forced on a business if three or more creditors file a petition with the bankruptcy court.

Once filed, creditors are temporarily prohibited from taking any action. The business or individual has four months to come up with a reorganization plan, though that can be extended to 18 months. After that, creditors can propose reorganization plans.

The plan is basically a contract between the debtor and creditor that defines how the business will operate and pay its financial obligations. Most plans include some downsizing to reduce expenses and free up assets.

Once a business or individual files the plan, creditors vote whether to accept it. They are usually cooperative since the next option is usually filing for a Chapter 7 bankruptcy. In Chapter 7, assets are liquidated and creditors could get little or nothing.

There are three classes of creditors – priority, secured and unsecured. They must vote in favor for it to be approved by bankruptcy court.

If the plan is rejected, the business or individual can ask for a “cram down,” in which they ask a judge to force creditors to accept it. In other words, they want to cram it down their throats.

There is no time limit on completing the repayment plan. Most take between six months and two years.

Working with a bankruptcy lawyer is an incredible opportunity to discharge debts and experience a fresh start for your financial life. A bankruptcy lawyer has the expertise to maximize your rights and benefits reaped from a Chapter 11 filing. The bankruptcy attorneys at the Guerami Law Firm can provide a free debt consolidation consultation to help you find the right answer for your unique debt problems and circumstances.


Visit or call (305) 432-3503 / (954) 953-1717 to get the answers you want, and the financial relief you are looking for.

Call us for a private FREE consultation. DON'T struggle with debt!

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