While businesses can file a Chapter 7 case in which operations cease and assets are liquidated by a Court appointed Trustee, the Bankruptcy Code affords an alternative under Chapter 11 whereby you can continue to operate your business in the normal course and reorganize the debt of the business.
There a limited number of practitioners that handle Chapter 11 cases due to their complexity and confirmation requirements in the State of New Jersey and even fewer have the number of years of experience and success rate that our firm does.
If your business is experiencing financial difficulties, please contact our reorganization experts at
(732) 292-9288 for a free consultation today, so that we can achieve the best results for you and your business.
A Chapter 11 case is initiated by the filing of a schedules similar to that of consumer cases, however additionally requires the submission of schedules that address the financial condition of the business including financial projections, balances sheets and related documentation.
As in a Chapter 13 case, a plan is required to be filed with the Court. However, unlike in Chapter 13 cases, creditors of your business will vote to either accept or reject the Chapter 11 plan. Along with the plan, debtors are required to file what is called a “disclosure statement”. This document is designed to provide creditors with sufficient information to enable them to make a decision as to whether they will vote for your against your plan. To confirm a plan under Chapter 11, you will need to obtain both a majority in number and two-thirds in value of the voting creditors. The presentation of the Plan and Disclosure Statement and ability to negotiate with creditors to obtain their votes is the most critical aspect of a Chapter 11 case and it is therefore imperative that you are represented by counsel with experience and expertise.
With our in-depth understanding of the intersection between business and law, our firm has been able to achieve a far greater percentage of confirmed Chapter 11 cases than is the norm.
In an effort to streamline the Chapter 11 process for financially distressed small businesses, the Small Business Reorganization Act (SBRA) was signed into law in August 2019. The SBRA, which is now often referred to by its location in Chapter 11 of the Bankruptcy Code under Subchapter V, took effect on February 19, 2020.
Beyond making Chapter 11 more accessible, Subchapter V also offers unique protections for owners of small businesses when it comes to mortgage modification. If you were forced to pledge a home office or mixed use property where you reside in connection with obtaining a loan for your business, you may be able to modify the terms of the loan in a Subchapter V proceeding, which relief would be otherwise prohibited in a standard Chapter 11 case.
In order to qualify for a Subchapter V election under the SBRA, your total secured and unsecured debt must not exceed $2,725.625. As a direct response to the severe economic hardships that small businesses and individuals in our country face due to COVID-19, this debt limit was temporarily increased to $7,500,00 on March 27, 2019 under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) for a one-year term.
Don’t lose out on your chance to qualify for a Subchapter V filing under the increased debt limit and schedule a free consultation with our firm to discuss how we can help your business.