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Dec 04 Firm Articles

San Diego Chapter 11 Bankruptcy Frequently Asked Questions

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Chapter 11 bankruptcy can be a frustrating, complicated and overwhelming experience if you don’t know what to expect. The bankruptcy attorneys at Higgs Fletcher & Mack know that you likely have many questions about what Chapter 11 means and how it can affect you, so we created this set of frequently asked questions to help guide you through your situation so that you can understand what is happening to your case finances.

How does Chapter 11 start

A debtor starts a Chapter 11 case by filing a Chapter 11 petition with the bankruptcy court. Unlike Chapter 7 where a bankruptcy Trustee is automatically appointed to oversee the case, the Chapter 11 debtor retains management and control of the assets and acts as a debtor-in-possession. The Chapter 11 debtor will continue to act as a debtor-in-possession throughout the case unless replaced by order of the bankruptcy court.

What is the automatic stay

Filing a petition causes the “automatic stay” to go into effect thereby preventing creditors from taking any further action to collect on most types of debt without a bankruptcy court order. The automatic stay provides a breathing spell for the Chapter 11 debtor and allows the debtor time to restructure and negotiate with creditors.

What is the reorganization plan in Chapter 11 bankruptcy

The goal of the Chapter 11 debtor is to confirm a “plan of reorganization” or “plan.” In order to do so, the debtor must file its proposed plan and a “disclosure statement” with the bankruptcy court. The disclosure statement must be approved by the bankruptcy court and must disclose sufficient information to enable a creditor to make an informed decision about voting on the plan. The plan sets forth how and to what extent creditors will be repaid.

What happens after you create the reorganization plan

The Chapter 11 debtor sends a copy of the plan, the court approved disclosure statement and a ballot for voting to creditors whose claims are impaired by the plan. At a confirmation hearing, the bankruptcy court will determine if the plan can be approved either with the consent of creditors or, in certain circumstances, “crammed down” over the objections of creditors.

What happens after the plan is confirmed

After confirmation, the Chapter 11 debtor emerges from bankruptcy and transforms from a debtor-in-possession into a reorganized debtor that operates under the confirmed plan. Both the reorganized debtor and creditors are bound by the terms of the plan. Reorganized debtors are able to discharge any pre-bankruptcy amounts that are not paid through the plan. Creditors will have the right to enforce the plan, but cannot collect on pre-bankruptcy claims not provided for in the plan.

Do I need a Lawyer to File Chapter 11 Bankruptcy

Chapter 11 bankruptcy laws are extremely complicated and involve a number of rules that involve precise timing and scheduling in order to fulfill properly. There are many stumbling blocks and obstacles you will encounter while negotiating Chapter 11 many of which can jeopardize your entire Chapter 11 case often times resulting in conversion to a Chapter 7 liquidation or dismissal.

That’s why it is always best to have an experienced and dedicated Chapter 11 bankruptcy attorney at your side to guide you safely through the reorganization process. Higgs Fletcher & Mack has represented large and small businesses from all across San Diego for over 70 years, and we are ready to help your company through these difficult economic times to emerge successful and profitable.


Considering Bankruptcy? Consult with an Experienced Bankruptcy Attorney Today.

Take the first steps to a debt-free future, and contact a San Diego Chapter 11 Bankruptcy lawyer Higgs Fletcher & Mack today.

Let us help you as well. Contact the San Diego Chapter 11 bankruptcy lawyers at Higgs Fletcher & Mack today!

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