Although some companies struggling to meet their financial obligations choose to file for bankruptcy of their assets and closing the door – called bankruptcy under Chapter 7 – other companies decide to stay in business a bankruptcy of chapter 11. Although a chapter 7 is not as simple as placing a "For Sale" sign on the front door of the company, a chapter 11 is much more complex. It is therefore very important for a company that pursues Chapter 11 to hire a lawyer who is specialized in its complexities. This article gives just a few reasons.
One of the reasons a business needs a highly qualified lawyer under Chapter 11 is that its leader should get the lawyer's confirmation that Chapter 11 is a good way forward. . The leader must discuss in detail the debts, assets and income of the company with the lawyer. They will also discuss executive ideas on reorganizing the business to stay afloat. After obtaining this information, a Chapter 11 bankruptcy lawyer can confirm that the reorganization is reasonable or explain the reasons why it is not a good option. Addressing this advice to a general practitioner would be similar to a person seeking divorce from a criminal lawyer.
Another reason why it is important to consult a competent Chapter 11 lawyer is that the debts of the companies must be classified and that the latter must propose a reorganization plan to remedy his financial problems. As a general rule, the reorganization plan can not exceed five years. To be accepted by the bankruptcy court, the recovery plan must be approved by the creditors. To get approval, it often takes a little negotiation, which is best done by a lawyer who has already followed the process and who knows the intricacies of the law.
Equally important, although the filing of a chapter 11 results in an automatic suspension that protects the assets of the company from the lawsuits of creditors, it is common for creditors to ask the bankruptcy court to "lift the suspension "and allow them to take measures such as foreclosure and otherwise seize assets. To ensure that you have the best possible lawyer against these attacks, it is necessary to find a lawyer with extensive experience in Chapter 11 bankruptcies.
Sometimes, the bankruptcy court will appoint a US trustee to oversee the reorganization of the business and verify whether it is in compliance with the restructuring plan; a qualified lawyer will be required to work with the attorney to ensure that his or her supervision does not disrupt the interests of the company. These are just a few of the reasons why an experienced Chapter 11 lawyer should be retained.