Chapter 11 Bankruptcy

Chapter 11 bankruptcy allows a financially distressed business to reorganize its obligations while continuing operations. Corporations, limited liability companies, partnerships, sole proprietors, and certain other debtors may seek relief under Chapter 11.

In most cases, the debtor remains in possession of the business and continues managing day-to-day operations while developing a plan of reorganization. The plan can address obligations to vendors, business lenders, taxing authorities, financing companies, landlords, equipment lessors, and other creditors.

Chapter 11 can also give business owners an opportunity to evaluate more than debt alone. The restructuring process may involve modifying payment obligations, addressing burdensome contracts or leases, improving cash flow, raising new capital, changing operating expenses, or repositioning the business for future growth.

Depending on the circumstances, Chapter 11 may also provide a structured way to sell some or all of a business or its assets while addressing liabilities through the bankruptcy process.

Chapter 11 Subchapter V

Subchapter V is a streamlined form of Chapter 11 designed for qualifying small business debtors. It was created to make the reorganization process more efficient and less burdensome for eligible businesses.

A Subchapter V trustee is appointed to assist with the case and facilitate the development of a reorganization plan, while the debtor generally remains in possession and continues operating the business.

For qualifying businesses, Subchapter V may provide a more practical way to address creditors, restructure debt, improve cash flow, and work toward a sustainable plan for continued operations.

Dennery Law helps small business owners evaluate whether traditional Chapter 11 or Subchapter V may be appropriate based on the company’s debts, operations, financial condition, and long-term objectives.