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Chapter 11

The Most Complex Bankruptcy, Chapter 11 is usually for businesses.

Who files a Chapter 11? Chapter 11 bankruptcy, often referred to as "business reorganization," is the most complex area of bankruptcy law. It is the kind of bankruptcy that corporations file to deal with looming financial catastrophe but individuals with very large debts can file Chapter 11 as well. Like chapter 13 bankruptcy chapter 11 can control mortgage foreclosure and IRS situations. Noteworthy is that corporations and LLCs are not permitted file Chapter 13, only "real people" may do so. As a result, incorporated businesses wishing to restructure or reorganize must look to Chapter 11.

Chapter 11 Plan. Chapter 11 is also like a chapter 13 in that you propose a payment plan, but in a chapter 11 the creditors also have an opportunity to vote on your plan. If enough creditors vote in favor of the plan it is usually approved. An approved chapter 11 plan essentially rewrites many of the contracts the debtor has with the creditors and the court then sends everyone back out on the street to live under their new arrangements.

Success in Chapter 11. Many chapter 11 cases do not succeed for the simple reason that a business that is hopelessly unprofitable cannot be made profitable by bankruptcy lawyers and the court system. When chapter 11 cases do succeed, it is usually because the business has a genuinely profitable core, but needs some time to reorganize, perhaps shed some unprofitable operations, and liquidate underused assets.

Relative Expense. Chapter 11 cases require an enormous amount of time and work by the attorney if the case is to succeed. In time expended these cases do not even resemble chapter 7 or chapter 13 cases. Furthermore, chapter 11 cases require the most skillful attorneys. Not every bankruptcy attorney is capable of properly handling a chapter 11 case. These cases are really a rarefied specialty within a specialty area of law. Consequently, fees in chapter 11 cases are significantly higher than other chapters. Retainer fees are in the thousands, not hundreds. The work is voluminous, the stakes are high, and time is often in short supply. It is stressful work. Our firm is fortunate to have Lisa C. Cohen as one of its attorneys. She has handled over 100 chapter 11 cases. You can confirm her reputation easily by asking other bankruptcy attorneys in North Central Florida including bankruptcy lawyers who practice in Gainesville.

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