Manhattan Chapter 11 Bankruptcy Solutions for Businesses

Understanding Reorganization Bankruptcy in New York

Navigating financial distress can be overwhelming, especially for businesses or individuals with substantial assets. Chapter 11 bankruptcy offers a strategic solution to restructure debt and regain financial stability without sacrificing control over assets. At the Law Office of Julio E. Portilla, P.C., our Manhattan bankruptcy lawyers specialize in guiding Manhattan businesses and high-net-worth individuals through the complexities of Chapter 11 bankruptcy, crafting tailored strategies to address unique financial challenges.

Commonly referred to as “Reorganization Bankruptcy,” Chapter 11 bankruptcy is usually filed by businesses that are looking for protection. In a Chapter 11 proceeding, the business is allowed to keep operating while paying off debts through a plan that is approved by the Bankruptcy Court. Businesses include anything from a sole proprietorship to a national corporation.

Eligibility for Chapter 11 Bankruptcy Filing

Chapter 11 bankruptcy grants a business the opportunity to stay alive by restructuring your obligations. Filing for bankruptcy must be in the best interest of the creditors of the company, however. Here are some of the parties that may propose a Chapter 11 bankruptcy:

• Individuals: Chapter 11 is only preferable for an individual when their debt exceeds the limits of Chapter 13, specifically: $383,175.00 of unsecured debt and $1,149,525.00 of secured debt.
• Businesses: Any type of business that is facing debt can file for bankruptcy in NY, including corporations, LLCs, partnerships, and small businesses. Businesses can also continue to operate during the bankruptcy.

More information on who can file for Chapter 11!

Comparing Chapter 7 and Chapter 11 Bankruptcy

The main difference between Chapter 7 and Chapter 11 bankruptcy is that one is liquidation and the other is reorganization. Some businesses feel that they can return to profitable operations with protection, and Chapter 11 is one way to accomplish this goal.

Differences Between Chapter 11 and Chapter 13 Bankruptcy

Chapter 11 and Chapter 13 are both bankruptcy chapters available in the United States, but they serve different purposes and are designed for different types of debtors. 

Chapter 11:

1. Purpose: Chapter 11 bankruptcy is primarily intended for businesses, but it can also be used by individuals with substantial assets or debts exceeding the limits of Chapter 13.
2. Eligibility: There are no specific debt limits for filing under Chapter 11. It is available to both individual and corporate debtors.
3. Debt Restructuring: Chapter 11 allows debtors to reorganize their debts and develop a plan to repay creditors while continuing their business operations.
4. Plan Approval: The debtor must submit a reorganization plan to the court for approval. Creditors have the opportunity to vote on the plan, and its confirmation requires majority creditor acceptance.
5. Timeframe: Chapter 11 cases are typically more complex and time-consuming compared to Chapter 13 cases. They can last several months to years.

Chapter 13:

1. Purpose: Chapter 13 bankruptcy is designed for individuals with regular income who have the ability to repay a portion of their debts over time.
2. Eligibility: There are specific debt limits for Chapter 13, both secured and unsecured. 
3. Debt Repayment Plan: Under Chapter 13, the debtor proposes a repayment plan to the court, outlining how they will repay their debts over a period of three to five years.
4. Plan Approval: The court reviews and approves the proposed plan, as long as it meets the necessary requirements. Creditors do not vote on the plan.
5. Timeframe: Chapter 13 cases generally have a shorter duration compared to Chapter 11. The repayment plan is typically completed within three to five years.

Timeline for Chapter 11 Bankruptcy in New York

In New York, the duration of a Chapter 11 bankruptcy case can vary depending on factors such as the complexity and size of the case. Larger and more complex Chapter 11 filings can last for five years or longer, depending on the amount of litigation involved and the terms of the case. However, the final installment in a Chapter 11 bankruptcy plan must be paid no later than 120 days after filing the petition, with the possibility of an extension granted by the court. It is important to note that the timeline for filing and completing the process can range from several months to years, depending on the specific circumstances of the case. Consulting with a bankruptcy attorney in New York would provide personalized information and guidance on the expected duration of a Chapter 11 bankruptcy case.

If you would like to learn more about filing for Chapter 11 bankruptcy in Manhattan or a surrounding area, contact the Law Office of Julio E. Portilla, P.C. for a FREE consultation. We can be reached via our online message form here or by dialing (917) 909-6166.

Steps in the Chapter 11 Reorganization Process

• Filing & reorganization plan: Within 120 days of initial Chapter 11 filings, debtors have the right to propose a plan that reorganizes their business operations. A reorganization plan is created by the debtor that details the financial structure. In some instances, creditors can oppose the reorganization plan, but once the court has approved the details, it becomes legally binding on all parties.
• Confirmation of plan: At this time, any creditors have the chance to vote on the plan. If all parties cannot approve the reorganization schedule, the case may revert to a straight bankruptcy, or the creditors may look for alternative avenues of relief. Some cases are dismissed, and this means that creditors need a way to recover their funds outside of bankruptcy law.
• Automatic stay: Just like other types of bankruptcy, petitioners receive an automatic stay immediately after their documents are filed with the relevant court. The stay prohibits creditors from all types of collection attempts and ensures that post-petition collection is null and void. In certain instances, the creditors may petition the court to appoint a trustee to manage the debtor’s financial business, but this is rare and usually occurs when there is gross mismanagement.
• Continue business operations: After reorganization plans have been fulfilled, debtors can re-emerge and continue business as usual.

Benefits of Chapter 11 Bankruptcy

Debt Restructuring

• Negotiate terms with creditors to reduce or extend payment obligations.

Asset Retention

• Businesses can retain operational control, and individuals can preserve significant assets such as real estate or investments.

Business Continuity

• Companies can continue daily operations, ensuring employees remain employed and customers are served.

Creditor Protection

• The automatic stay halts collection actions, lawsuits, and foreclosures, providing a much-needed financial breathing space.

Flexible Repayment Plans

• The debtor proposes a plan tailored to their financial situation, subject to court approval.

Contact Our Chapter 11 Bankruptcy Lawyer

At the Law Office of Julio E. Portilla, P.C., our Manhattan Chapter 11 bankruptcy lawyer understand the stress and uncertainty that financial difficulties can bring. Our team is dedicated to providing compassionate, personalized legal support to help you navigate the complexities of Chapter 11 bankruptcy and achieve lasting financial stability. Whether you are a business owner looking to restructure debts while maintaining operations or an individual seeking to preserve significant assets, we are here to guide you every step of the Chapter 11 bankruptcy process way.

If you would like to learn more about filing for Chapter 11 bankruptcy in Manhattan or a surrounding area, contact the Law Office of Julio E. Portilla, P.C. for a FREE consultation. We can be reached via our online message form here or by dialing (917) 909-6166.