Filing for Chapter 11 bankruptcy can be a great way to obtain a fresh financial start. Businesses in Tyler may be able to reorganize their debt, establish a payment plan and eliminate debt over a given period of time, giving them the financial freedom they need to reclaim their independence.
However, filing for bankruptcy can be a challenging endeavor. Creditors may push back against a bankruptcy filing, the court may be harsh when analyzing one’s case and the logistics themselves can be labyrinthine. Yet, failing to adequately address any one of these issues could lead to an unwanted outcome. Therefore, those who are considering filing for bankruptcy should themselves know the ins and outs of the process, or seek assistance from a legal professional who does.
When filing for Chapter 11 bankruptcy, which is essentially a reorganization of liabilities to provide debt relief, the court will appoint a creditors’ committee. These committees have a lot of power over a debtor’s affairs, especially since they are typically made up of the holders of the debtor’s largest unsecured debts. This committee can investigate a debtor’s activities and even assist them in developing their Chapter 11 plan. In essence, this committee’s job is to monitor a business’s activities to ensure that the business is being run properly so that debts can be repaid. Debtors may need to push back against this committee, particularly if their idea of how a business should be run contradicts the debtor’s. In these instances, the matter may have to go back in front of a judge where legal arguments can be presented.
The creditors’ committee is, of course, only a small part of the Chapter 11 bankruptcy process. Businesses that are facing overwhelming debt will first need to ensure that they can qualify for a given type of bankruptcy protection and successfully pursue it. By seeking the assistance of a bankruptcy attorney, these entities may be able to have the knowledge, skill and advocacy on their side needed to successfully navigate this oftentimes confusing and challenging process.
Source: United States Courts, “Chapter 11 – Bankruptcy Basics,” accessed on March 5, 2017