While these Chapter 11 bankruptcy FAQs are informative, contact Denver Bankruptcy Lawyer Jon B. Clarke when you’re ready for more specific answers regarding your best debt relief options.
Here is the conclusion to our blog series Chapter 11 Bankruptcy FAQs.
Q – Are bankruptcy trustees appointed in Chapter 11 bankruptcy cases?
A – Not typically, but they can be appointed by a bankruptcy court if or when the following circumstances may arise:
- Bankruptcy fraud is suspected by a court.
- Some type of incompetence with the filing or handling of a bankruptcy case is suspected by the court.
- A business’ (i.e., the debtor’s) funds are perceived as being grossly mismanaged.
In other words, a bankruptcy trustee will be appointed in Chapter 11 cases when a presiding court suspects that something may be wrong or off with the case.
Q – What does a court have control over when a business files for Chapter 11 bankruptcy?
A – Simply put, a lot. More specifically, when a business files for Chapter 11 bankruptcy, the following are the primary issues over which the court has authority:
- The sale of a business’ assets, including (but not limited to) a business’ inventory, real estate, buildings and other property that may need to be liquidated as the business reorganizes
- Any decisions regarding expanding certain business operations and/or shutting down other operations
- Any leases and/or loans a business may plan to take out or break
- Any contracts and/or agreements a business may enter into (or break) with vendors, contractors, unions, etc.
- Issues regarding attorneys’ fees or other the expenses for the services of other professional consultants.
Q – What about the reorganization plans for businesses going through Chapter 11 bankruptcy? What are the terms for the court approving these plans?
A – In general, a bankruptcy court will approve (or “confirm”) a business’ Chapter 11 plan as long as the plan meets the following requirements:
- The plan is feasible – In other words, the business can actually realize the plan, and when properly implemented, the plan will result in creditors being repaid.
- The plan has been made in good faith – While this means that the plan will have to be in full compliance with the applicable laws, it also means that it should be developed with a business’ full intent on following through with the plan.
- The plan is fair and equitable – There are specific legal standards a court will use to make this determination.
- The plan is in the “best interests” of creditors – In other words, the plan should provide creditors with at least the same amount of funds as they would receive if the business were to go through a Chapter 7 liquidation.
Because developing a Chapter 11 plan is a complicated and critical issue to a business bankruptcy, be sure to work with an experienced Denver bankruptcy lawyer like Jon B. Clarke to ensure your business is able to develop a viable plan that will position it for success both in the bankruptcy case – and in the future.
Contact the Law Office of Jon B. Clarke, P.C. Today
To learn more about your best options for debt relief, contact us at (866) 916-3950 or email us using the contact form on this page.
