Chapter 11 Bankruptcy in California

December 19, 2012

In the past, bankruptcy often carried a stigma, but times are changing, and bankruptcy is becoming a preferable option for many. The difficult economy makes bankruptcy a viable and respectable choice, and filing for bankruptcy allows individuals and businesses to start fresh and rebuild

Chapter 11 Bankruptcy for Businesses

Chapter 11 Bankruptcy allows the debtor to enter into agreements with creditors that will keep the debtor's business in operation. Sole proprietorships, partnerships and corporations are all eligible for Chapter 11. Sole proprietors, since their businesses are not distinct entities like corporations and partnerships, are vulnerable to having their personal assets used to satisfy creditors during bankruptcy. By contrast, corporate and partnership owners are shielded from personal liability, although, there are some instances where partners may be subject to some personal liability.

To move forward with this type of bankruptcy, the debtor files a voluntary petition, a list of assets and liabilities and a statement of financial affairs with the court. Once the debtor business moves into bankruptcy, it is known as the debtor in possession. The debtor in possession retains control of company property, plays the role of a fiduciary and must perform all of the duties set out in the Bankruptcy Code.

Duties can include:
-Filing informational reports
-Creating monthly operating reports
-Accounting for the property
-Examining and possibly objecting to claims
-Employing professionals to assist in the bankruptcy process

The number and types of duties will vary depending on the agreed terms and what the court decides to order for a particular situation.

Chapter 11 Bankruptcy for Individuals

Although Chapter 11 Bankruptcy typically is used in the business realm, it can also be used by individuals. In these situations, a plan is devised around the debtor's possible future earnings. The plan allows an individual to reorganize his or her debt in a structured and feasible manner, often with reasonable monthly payments.

Individual Chapter 11 Bankruptcy can also help individuals keep their homes and pay off their mortgages as well as enable them to keep important assets like cars.

Filing for Chapter 11 Bankruptcy can often be a complicated process. It is wise to seek out the counsel of a seasoned California bankruptcy attorney to aid you in understanding your options for a sound financial future.

Article provided by Law Offices of Andrew H. Griffin III
Visit us at http://www.andrewgriffinlawoffice.com