Statewide clientele but with emphasis on the Front Range communities of Greenwood Village, Boulder, Aurora, Centennial, Lakewood, Englewood, Avada, Westminster, Broomfield, Thornton, Golden, Littleton, Castle Rock, Monument, Colorado Springs, Highlands Ranch, Aurora, Parker, Centennial and Pueblo as well as other cities throughout Arapahoe County, Boulder County, Douglas County, City & County of Denver, Elbert County and Jefferson County.
Denver Chapter 11 Bankruptcy and Reorganization Attorney
Denver Chapter 11 Reorganization/Bankruptcy Lawyer
Chapter 11 reorganization is a procedure to reorganize the debts of ongoing businesses and, less commonly, of higher income/net worth individuals. It is a much more complicated and time-consuming process than a Chapter 7 bankruptcy. The debtor and creditor lawyers, the U.S. Trustee’s office, the Unsecured Creditors’ Committee, and the Bankruptcy Judge assigned the case are all much more involved.
The active period of the case will take anywhere from several months to several years. However, Chapter 11 can provide highly satisfactory relief in certain asset/debt situations. At the Law Office of Jon B. Clarke, P.C, our Denver Chapter 11 bankruptcy attorney Jon Clarke is well-prepared to explain how Chapter 11 will affect you.
Debtor in Possession
Upon the filing of a Chapter 11 petition, a new legal entity is created known as the Debtor in Possession (DIP). The DIP is automatically given protection from creditors, who cannot pursue collection in state court or exercise certain default remedies they would otherwise have.
The DIP operates its-his-her business under Bankruptcy Court and United States Trustee supervision, while negotiating a plan of reorganization with secured, priority unsecured, and general unsecured creditors. The largest trade creditors may form a creditors’ committee to negotiate terms of the plan with the DIP. In a best case scenario, the plan will be negotiated with involved creditors and be ready for filing with the petition or no later than four to six months after the Chapter 11 case is filed.
Bankruptcy Duties Since 2005
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 imposes numerous new duties on the DIP, the U.S. Trustee, and the court. It requires for small business debtors that a plan be filed by the debtor within 300 days of the filing date. It sets an absolutely non-extendable deadline for non-small business debtors to file a plan within 18 months from the filing date.
The 2005 Act means testing feature will presume a Chapter 7 filing as abusive for certain above-average income individuals. If these individuals have more than $1,149,525 of secured debt or $383,175 of unsecured debt as of 2014, they are ineligible for Chapter 13. Thus Chapter 11 will be the only available relief.
To be affordable, future individual and small business cases will resemble a “Chapter 13 on Steroids,” with recyclable, pre-packaged, standard-form plans and disclosure statements. Prior to 2006 Mr. Clarke obtained Chapter 11 discharges for many high-income/failed business individuals and is quite familiar with the special issues these “niche debtors” bring to the table.
For the court to confirm or approve, the plan and make it binding on creditors, a majority of impaired, or affected, creditors must vote to accept the plan. Nationwide, the vast majority of DIPs fail to achieve plan confirmation within 12 to 18 months of filing. These cases are either converted to Chapter 7 liquidation or dismissed, whichever the court feels is in the best interest of creditors. Or, if an individual debtor requests, the court may convert the Chapter 11 case to one under Chapter 12 or 13.
To be a successful DIP, a business entity should have adequate working capital and profitable operations from the filing date forward. Many hours of hourly-rate attorney time are needed to properly prepare, file, negotiate, draft, confirm and complete Chapter 11 reorganizations. After the initial retainer is used up, the DIP attorney is unlikely to be further compensated unless and until the reorganization is successfully concluded. For this reason, experienced DIP attorneys will require a substantial initial retainer before agreeing to file an entity’s Chapter 11 case.
Contact Us Today
Attorney Clarke has extensive experience representing clients in Chapter 11 bankruptcy. Contact his law firm today and discover how he can help you.
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