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How Chapter 11 Bankruptcy Works

While most bankruptcy cases involve individuals whose personal debts have reached unmanageable levels, corporations and other entities can just as easily fall into financial turmoil which necessitates bankruptcy. Businesses do not have the same avenues of relief that individuals enjoy, but they are able to take advantage of a special provision of the bankruptcy code which allows a company to place a stay on the collection of its debts while it undergoes a restructuring process with the intention of returning to profitability and the ability to pay back its creditors through Chapter 11.

At the Russell Van Beustring P.C., our legal team has a comprehensive understanding of the Chapter 11 process and how to make it work effectively for businesses in a variety of debt situations. If your company has become overwhelmed by business debts which make it impossible to continue functioning, call our experienced Katy Chapter 11 bankruptcy attorneys today at 713-973-6650 to learn more about how Chapter 11 bankruptcy works.

Undergoing Chapter 11

In some situations, the appropriate manner of resolving a business bankruptcy is a Chapter 7 liquidation in which the assets of the company are sold off to pay business debts and the company ceases to exist at the completion of the process. Chapter 11 offers an alternative solution in which the business remains functioning and retains its identity during and after the process. The following is a rough guideline to the course of a Chapter 11 case:

  • An automatic stay is placed against collections on the businesses debts
  • The business creates a reorganization and repayment plan which must be accepted by its creditors.
  • The plan is approved by the businesses creditors and confirmed by the bankruptcy court.
  • The restructuring of the business takes place and the company moves forward with its repayment plan under the supervision of the court.

In some cases, business debts exceed the full assets of the company and it will be necessary to transfer the ownership of the company to creditors in order to successfully confirm a repayment plan.

Contact Us

If your company is unable to continue functioning with its current debt situation, the experienced Katy Chapter 11 bankruptcy lawyers at the Russell Van Beustring P.C., may be able to help your business to navigate this difficult period. For a free consultation contact us by calling 713-973-6650.


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