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Video Transcribed: Oklahoma Bankruptcy Attorney Edward Kelley here, answering your bankruptcy questions with oklahomacitybankruptcyattorney.pro. As always, I want to remind everyone with the COVID-19 crisis, one silver lining now is probably the best time to file a Chapter seven or 13 that you may ever encounter. Just to run down that again, trustees are being very kind and generous given the true difficulties everyone is going through.
If your income’s been too high to do a seven right now with cut hours or unemployment, you very well may qualify for at least a short period of time. If you’re in a Chapter 13, you’ll probably have a much lower payment based on that lower income. You can do everything from home and they will not take your stimulus check.
With the stimulus, you may have the means to hire an attorney. I know I’m a definitely cutting people slack on fees that need it. So you may have that stimulus check and the income, at least for a time, to qualify for a seven or have a lower payment in a 13.
But what we’re going to talk about today… We may be seeing a lot more of these are the need for these, is a Chapter 11. I haven’t discussed these previously. These are much more complicated than your other Chapters, but basically what it boils down to is a business that, facing debt, wants to reorganize itself. In certain cases an individual can file as well, although that’s much more rare.
This can be filed by the business itself voluntarily, or this can be filed involuntarily against a business by its creditors. So today I’m just going to give you a quick review and then we’re going to go into specific elements.
Chapter 11 again, can be filed… Let’s just take the case it’s filed by a business entity in order to save itself. It’s facing crushing debt that it can’t manage and is about to go under. So it can file the Chapter 11, much like in a seven or 13, in order to get the automatic stay, which will give it some breathing room from creditors and stop them from actions against the company temporarily.
Those creditors get an opportunity, not just to object to a plan like in a Chapter 13, but to make motions and considerations for specifically how it should be changed or how it should be worded. I guess you could say it’s a souped up version of the 13 plan being passed around to creditors. Of course, as always they’ve got to file a proof of claim.
But they have a much more active role. You’ve got to get them satisfied in order to get a Chapter 11 plan, which is called in the case of a Chapter 11, a Plan of Reorganization, passed through the trustee and through the Creditor’s Committee. We’ve got the debtor in possession, which is basically the company running its day to day operations through the bankruptcy and with limited authority to make the day to day decisions.
Now obtaining more credit, terminating or entering new executory contracts or leases. Generally these are things that are going to have to go through the trustee and or the Creditor’s Committee, but the debtor in possession does retain some powers to run the business, while they are coming up with their reorganization plan. Once that plan, if it is, is passed, and this process can take years in some cases, then it’s implemented and you’re at the beginning of a successful Chapter 11.
So those are the basics. That’s a very fast overview, but we’ll get into more specifics tomorrow. As always, you can reach me at oklahomacitybankruptcyattorney.pro with all your bankruptcy questions. Or email me at edward@wirthlawoffice.com.