Chapter 11 Bankruptcy In NC
A Chapter 11 bankruptcy is a way to reorganize your business debt while continuing to do business. Chapter 11 enables you to continue your livelihood without the constant threat of creditors to sue you, shut down your business, or otherwise disrupt you from being profitable.
When you file Chapter 11 bankruptcy, you and your bankruptcy attorney are proposing a plan to your existing creditors. Depending upon the profitability and assets of the ongoing business concern, your plan will propose to pay a percentage of your debt to creditors over time.
The Cost of Chapter 11 Bankruptcy
The court charges a filing fee of roughly $1,200.00, together with an administrative fee of $550.00. There are ongoing quarterly fees which must be paid to the court as well. Your attorney fees related to Chapter 11 bankruptcy are hourly. While your bankruptcy attorney will need to evaluate your case before estimating the attorney fees, it is a safe assumption your Chapter 11 bankruptcy will cost somewhere between $10,000.00 – $15,000.00. We know this is a substantial amount of money. Whether to file Chapter 11 will depend upon whether the cost of doing so is outweighed by the benefit to you and your business. Your bankruptcy attorney should help you sort through those questions as you gather information about the business together.
Do My Creditors Have To Accept My Chapter 11 Plan?
No, your creditors do not have to accept your Chapter 11 plan. However, if the plan is reasonable given the income, assets, and overall financials of the business, your bankruptcy attorney will argue on your behalf that the plan should be accepted. Generally, your Chapter 11 plan is a five year plan; however, you can propose a shorter plan if the shorter plan pays all creditors in full over the course of the plan. Generally, you must commit all of the business’s disposable income over the five year period to the plan. The calculation of disposable income is an equation involving income and expenses. If income and expenses change significantly during the plan, your Chapter 11 plan may need to be re-evaluated. In this regard, the Chapter 11 bankruptcy is reflective of your ability to pay, both at the time of filing and ongoing during the life of the plan.
Chapter 11 For Corporations vs. LLCs or Partnerships
A Chapter 11 bankruptcy for a corporation will only consider the assets of the corporation. To the extent the individual filing bankruptcy owns stock of the corporation, the stock assets must be considered in the assets calculations filed with the court.
A Chapter 11 bankruptcy for a partnership, LLC or sole proprietorship, is distinguishable from a Chapter 11 for a corporation or “C-corp”. In this filing, the individual and the business are treated as one for bankruptcy. The result is that all personal assets must be disclosed and considered when proposing the overall plan to pay back creditors over time in Chapter 11.
Chapter 11 vs. Personal Bankruptcy
In many cases, it is preferable to file a personal bankruptcy—Chapter 7 or Chapter 13—in lieu of filing a Chapter 11. The cost of filing is considerably lower, and the complexity of the case is different as well. If your company has few assets, you may be able to accomplish your goals by dissolving the company. This will relieve the company’s obligation under company debt. To the extent there is a personal obligation attached to the company debt, a Chapter 7 or Chapter 13 would serve to discharge the individual from that debt.
Speak With A Charlotte Bankruptcy Attorney
The next step is to speak with a Charlotte Bankruptcy attorney. Consultations and case evaluations can be done over the phone or in person. You’ll come away with a much deeper understanding of your options. This alone provides peace of mind. If you decide to move forward with a bankruptcy filing, we can discuss next steps and take action together immediately. Call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out to you. We know you have options. We hope you choose to Recover With Us.