Chapter 11 Is Specifically for a Business and Specifically for a Business to Reorganize
Video Transcribed: Oklahoma Bankruptcy Attorney Edward Kelley here, answering your bankruptcy questions with oklahomacitybankruptcyattorney.pro. Just going to go into a little more detail about the new Chapter 11 Small Business Reorganization Act, which is a big deal, especially in these COVID times for streamlining Chapter 11 and suiting it to small businesses.
For a long time, small businesses haven’t been able to fit under this chapter, often due to the complexity, expense, and resources needed to make it through a chapter level, which can last years.
Generally, see the bigger companies doing it. So, hence, just recently, they’ve added the Small Business Reorganization Act to Chapter 11 bankruptcy. As you recall, a Chapter 11 is specifically for a business and specifically for a business to reorganize and continue operating while it works out its debts.
Of course, this requires good management, assets, and creditors that’ll work with you. Because typically in a chapter 11, your creditors have almost as much say as you do in how your business is going to be run. You’re what’s called a “debtor in possession.”
So in this video, I’ll speak to the first major change in the Small Business Reorganization Act, which makes the Chapter 11 much more like a 13 for an individual, meaning there is not necessarily going to be a creditor committee at all, which is a central feature of Chapter 11.
You now, your business has the power to create a plan, which is far superior in consideration by the trustee to anything offered by your creditors and a plan you can reasonably expect if it’s a fair and practical to be confirmed over the objections of your creditors. This is an almost fundamental difference from how Chapter 11 normally works.
And really, you need that power with small business because often, your creditors are giant companies or large companies with far more power and resources, particularly for lawyers than you have. So, as in a Chapter 13, even though in those cases, you’re dealing with those mortgage companies and big car companies, you have the upper hand via the nature of the bankruptcy code. That wasn’t the case with 11’s, arguably.
Now, it is if you’re a small business. You can reach me at 1-888-DEBT-LINE, firstname.lastname@example.org or on Facebook at Oklahomans for Debt Relief.