Chapter 11 is available to individuals, partnerships and corporations. Since it has no limits on the amount of debt one is looking to have wiped away, corporations often use Chapter 11 in Suffolk County when they're looking to restructure their debts, while people usually use Chapter 7 or 13 for personal bankruptcy.
What's particularly great about Chapter 11 is that the entity that files (known as the "debtor") usually gets to keep its assets and continue to operate its business (so you can see why corporations tend to choose Chapter 11 bankruptcy filing rather than Chapter 7 or 13). However, any corporation that files Chapter 11 in Suffolk County (or anywhere, for that matter), operates that business under court supervision and, if the court deems the management of the business to be ineffective or dishonest, the court may appoint a trustee.
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The purpose of Chapter 11 -- from the court's perspective -- is to allow a corporation to continue doing business so that it may pay its debt and keep its obligations. The bankruptcy court has the power to cancel some or all of a company's debts, giving the corporation a chance to make a fresh start.
As an example of a recent and successful Chapter 11 filing: General Motors.
However, because Chapter 11 is so "flexible" and complicated many bankruptcy experts believe that only about 10 percent (or even fewer!) of those corporations that file Chapter 11 are successful at their reorganization.
People tend to file Chapter 13, rather than Chapter 11, because it's more efficient and is more affordable for individuals and their families. What's more, the debtor who files Chapter 13 usually can keep most of his or her assets, pay off unsecured debt by selling certain assets not protected by Chapter 13 and catch up on his or her obligations.
Filling a Chapter 11 petition is very complicated, especially because those who normally file Chapter 11 are business entities. Bankruptcy experts recommend that just about any business considering Chapter 11 consult with a good bankruptcy attorney or law firm.
Whether you're an individual looking into filing Chapter 13, or a corporation considering filing Chapter 11, Suffolk County law firm Blutter and Blutter can help ensure that your filing is as successful as possible. Contact us today.
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