Chapter 11, Subchapter V Bankruptcy Attorney in Ohio
When businesses or individuals have significant financial difficulties and large amounts of debt, Chapter 11 bankruptcy protection can provide relief. Chapter 11 bankruptcy filings allow debtors to retain their assets and even keep business operations going while reorganizing their debts into more manageable, long-term payment plans. While filing Chapter 11 bankruptcy may be the best choice for you, the process of filing for Chapter 11 bankruptcy is notoriously complicated. The Ohio Chapter 11 bankruptcy attorneys at Amourgis & Associates, Attorneys at Law, have the resources and years of experience needed to help you restructure your debt and get your finances back on track.
Our firm fights aggressively for individuals and families in Ohio. We work quickly to provide strategic, elegant solutions to even the most stressful problems. We have several Chapter 11 bankruptcy lawyers at locations throughout Ohio. To learn more about how we can help you, contact us today for a free, confidential consultation.
Who Can File Chapter 11 Bankruptcy?
Organizations often file for Chapter 11 bankruptcy when they are unable to meet their debt obligations but still want to find a way to keep their businesses afloat. Chapter 11 bankruptcy is also known as “reorganization” bankruptcy because it allows filers to restructure their debts into more manageable payments, pay creditors over time, and avoid losing their assets.
Owners of all types of businesses may file for Chapter 11 bankruptcy, including:
- Sole proprietorships
- Small businesses
- Large national corporations
Individuals are also eligible to file for Chapter 11 bankruptcy, though this is less common because of the costs and strict requirements associated with a Chapter 11 filing. Individuals who file for Chapter 11 bankruptcy typically do so when they have too much debt to file for Chapter 13 bankruptcy, which is limited to those with less than $394,725 in noncontingent, unsecured debts and less than $1,184,200 in secured debts.
It’s also important to note that, according to Chapter 11 of the U.S. Bankruptcy Code, neither individuals nor businesses may file for protection under Chapter 11 if:
- They filed a prior bankruptcy petition within the past 180 days that was dismissed because of their willful failure to appear in court or comply with court orders.
- They filed another bankruptcy petition within the past 180 days that was voluntarily dismissed because a creditor asked the bankruptcy court for assistance in recovering property against which the creditor held a lien.
Additionally, those who wish to file for protection under Chapter 11, Title 11, United States Code must undergo credit counseling from an approved credit counseling agency within 180 days before they file. Credit counseling courses may be conducted in either individual or group settings.
In some emergency cases, filers may be eligible to forego credit counseling if a U.S. trustee determines that no appropriate agencies are currently available to provide the required counseling. It’s also important to note that if you develop a debt management plan during your mandatory credit counseling, you must submit that plan to the court upon filing.
What Is Subchapter V of the Chapter 11 Bankruptcy Code?
In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was introduced to streamline the Chapter 11 filing process for small businesses. The BAPCPA allowed businesses to follow a one-step process for soliciting and confirming debt reorganization plans but also increased certain reporting and procedural requirements that made it more difficult to have plans approved by creditors.
In August 2019, the Small Business Reorganization Act (SBRA), also known as Subchapter V of Chapter 11 of the Bankruptcy Code, was signed into law. This new subchapter went into effect in February 2020. It was designed to make Chapter 11 filings more accessible to small businesses.
As a result of the COVID-19 pandemic, Congress also increased the debt limits for Subchapter V filings to $7.5 million through March 27, 2021, providing additional relief to many struggling small businesses whose earnings exceeded the original cap.
Some of the advantages of the SBRA include:
- No exclusivity period – In traditional Chapter 11 bankruptcy cases, debtors must file reorganization plans within 120 or 180 days, after which time creditors may submit their own proposals. Subchapter V eliminates this period and allows only debtors to file reorganization plans.
- Fewer administrative costs – Subchapter V cases eliminate the fees that are normally paid to a U.S. trustee and to a creditors’ committee unless the bankruptcy court orders the appointment of such a committee.
- More time to pay administrative costs – In traditional Chapter 11 cases, debtors must pay administrative expenses as soon as reorganization plans are approved. For plans filed under Subchapter V, these expenses may be paid off over the life of the reorganization plan.
- Automatic appointment of trustees – In most Chapter 11 bankruptcies, a trustee is only appointed if the court believes it is necessary. In Subchapter V filings, third-party trustees are automatically appointed, which gives cases a greater chance of impartial resolution.
- No creditors’ committees without cause – Conversely, typical Chapter 11 bankruptcies involve committees of creditors who can work together to establish demands. Under Subchapter V, such committees are only formed for cause, which decreases costs and possible contention.
Do I Need a Lawyer to File Chapter 11 Bankruptcy in Ohio?
You are not required to hire an attorney to assist with your Subchapter V of Chapter 11 bankruptcy filing. However, bankruptcy proceedings are nuanced and often involve high stakes, so it’s likely in your best interest to seek the guidance of a professional.
The Ohio Chapter 11 bankruptcy attorneys of Amourgis & Associates, Attorneys at Law can help you:
- Account for all of your debts and income sources – When you file your Chapter 11 bankruptcy petition, you will be required to include detailed lists of your debts, assets, sources of income, and other financial records. Failing to submit certain information could lead the court to reject your petition or make certain debts ineligible for restructuring. An attorney can help you prepare your petition carefully to avoid these possible setbacks.
- Develop a strong reorganization plan – Filing for protection under Chapter 11 bankruptcy allows you to keep certain assets but does not eliminate your responsibility to repay creditors. Our knowledgeable bankruptcy attorneys can offer advice on which assets you may want to retain and which debts you can include in your reorganization plan.
- Negotiate with creditors on your behalf – To have your reorganization plan approved by the bankruptcy court, you first need to gain acceptance of the plan from any creditors who will be affected by it. In most cases, this means negotiating payment amounts and due dates with creditors, who are generally represented by their own legal teams.
- Represent you in bankruptcy court – Every Chapter 11 bankruptcy case involves at least one court appearance, at which your creditors may present evidence against you. Creditors may bring other lawsuits during the process as well, so it’s a good idea to establish a relationship with a reliable attorney of your own as early on as possible.
- Comply with administrative deadlines – While you are under Chapter 11 bankruptcy protection, you will be required to file financial updates and pay administrative fees on a regular basis. An Ohio Chapter 11 bankruptcy lawyer can help ensure you meet these requirements, comply with administrative deadlines, and handle challenges from significant changes to your income.
What Is Reorganization in a Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is generally filed by businesses and individuals with a high net worth who want to preserve their assets by reorganizing their debts. This differs from a Chapter 7 bankruptcy, in which debtors liquidate and sell off most of their available assets in exchange for wiping out most of their outstanding debts.
When you file Chapter 11 bankruptcy, you become what is known as a debtor-in-possession, which means that you retain possession of your business and assets while you work to pay off debts under a reorganization plan. Your reorganization plan is one of the most important elements in your petition for Chapter 11 bankruptcy.
After your creditors and the bankruptcy court approve your plan, certain chunks of your debt will be discharged so you can continue to pay down your remaining debts according to the plan. Reorganization plans typically give priority to certain types of debt and are intended to be developed with the best interests of your creditors in mind.
Chapter 11 reorganization plans must specify how debtors intend to manage the following types of debt:
- Secured debts, which are backed by collateral, such as a home or car
- Priority unsecured debts, such as back taxes or child support payments, which must be paid before non-priority debts
- General unsecured debts, such as credit card debt and student loan debt
- Debts to equity security holders, such as your business’ shareholders
Get Legal Help from Our Ohio Chapter 11, Subchapter V Lawyers
Filing for Subchapter V of Chapter 11 bankruptcy is a big decision that can impact your business and your finances for years to come. Recent changes to the law may further complicate this already intricate process. It’s in your best interest to work with a seasoned bankruptcy attorney who understands the Bankruptcy Code and its implications.
The Ohio bankruptcy lawyers of Amourgis & Associates, Attorneys at Law, have experience handling all types of bankruptcy cases and know how to put you on the best path to financial relief. Contact us now to speak with an experienced attorney who can offer personalized guidance in a free and confidential consultation.