Chapter 11 Bankruptcy Definition
Looking for a simple chapter 11 bankruptcy definition? Well, you’ve come to the right place. Trying to decipher all of that legal speak can be more than a headache, though this term can be easily explained.
Basically, those companies and corporations that file under Chapter Eleven are seeking to restructure their existing business before the eyes of the court. In order to go through this type of proceeding, a petition must be filed with the bankruptcy court. This court must be within the area that you reside in (not the area that your business is located in). There are two instances for which this type of petition may be filed 1) the debtor may decide to file this petition 2) your creditors may file this petition for you. From this point on, the chapter 11 bankruptcy definition gets a bit more complex.
In order to file for Chapter Eleven, a $1,000 case filing fee and a $39 miscellaneous fee must be paid to the court clerk immediately (sometimes, the court will allow installments). Those that neglect to pay this fee may face case dismissal. As for the filing itself, those that filed under Chapter Eleven will be able to reorganize their business without any detriment to personal property. Additionally, this filing does not affect partners, stockholders, or owners. Of course, a company’s stock may plummet based upon this type of filing, but this is not always the case. However, it should be noted that a debtor that is also an owner will not be able to protect their own assets under this filing.
Once this filing has been submitted to the court, the company will then be assigned a court trustee. The trustee then monitors all of the business operations. Additionally, a trustee will meet with all creditors in order to go over any specific details. A trustee will also monitor the monthly income, spending, and operating expenses in relation to the debtor. Also, a debtor must pay a quarterly fee to the trustee, which can range from $250 to $10,000. If a debtor fails to pay these fees, the trustee can have the filing transferred to another bankruptcy type. As you can see, the details following the initial chapter 11 bankruptcy definition are quite extensive.
Those considering this type of filing should contact a bankruptcy lawyer. Though the information contained in this article may be helpful, it is not to be taken as legal advice.
Hopefully, the above chapter 11 bankruptcy definition has been of some help to you and your business. To delve further into this type of case, it is best to contact a competent corporate lawyer.