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CHAPTER 11 BANKRUPTCY Riverside Bankruptcy Attorney
What is a Chapter 11 Bankruptcy?
Chapter 11 is known as the reorganization chapter of the bankruptcy code because it permits a debtor to reorganize financial obligations while retaining assets. This may be accomplished through the sale of certain assets to pay down debt and by restructuring existing debts. Both individuals and businesses can file a Chapter 11 bankruptcy.
No individual may be a debtor under Chapter 11 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing.
The U.S. Trustee or Bankruptcy Administrator
The U.S. trustee plays a major role monitoring the progress of a Chapter 11 case and supervising its administration. The U.S. Trustee is responsible for monitoring the debtor in possession’s operation of the business and the administration of bankruptcy estate.
In addition, the U.S. Trustee monitors applications for compensation and reimbursement by professionals, the execution and approval of plans and disclosure statements filed with the court, and the conduct of creditors’ committees.
The U.S. Trustee conducts a meeting of the creditors, often referred to as the “section 341 meeting”. The U.S. Trustee and creditors may question the debtor under oath at the section 341 meeting concerning the debtor’s acts, conduct, property, and the administration of the case.
The Automatic Stay
All judgments, collection activities, foreclosures, and repossessions of property are suspended for a period of time and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition.
A stay of creditor actions against the Chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. During this time negotiations can take place to try to resolve the debtor’s financial situation.