Chapter 11 Bankruptcy

Maintaining Control of Your Business While You Find Relief From Debt

Challenging economic times have brought many large companies and corporations to the brink of financial ruin. Rather than pursuing a complete liquidation, filing for Chapter 11 bankruptcy may be an option for business reorganization. A skilled Chapter 11 bankruptcy attorney can advise and guide corporations through the legal process, arriving on the other side with significantly less debt and space for a fresh start.

Maintain Control of Your Business While You Find Relief From Debt

For more than 30 years, Bunch & Brock, Attorneys at Law, in Lexington, Kentucky, has helped financially stressed companies navigate through the complexities of corporate reorganization.
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Our reputation for excellence stems from building and maintaining relationships, keeping lines of communication open and providing quality legal representation. Our deep knowledge of corporate governance, law and finance enables us to meet executives at the conference table, review income statements and balance sheets, research the terms of existing debt, and create a strategy for reorganization. We act as legal counselors and strategists who can partner with corporate leaders to explore options and establish the best way forward. Our goal is to support your goals so the company or organization can resume and achieve its mission. Chapter 11 bankruptcy may be the legal tool that most effectively facilitates this.

Attorneys at our firm exhibit extensive knowledge of the Chapter 11 bankruptcy process, working toward the best resolution options for your company. We possess years of courtroom experience and have represented multiple corporate clients seeking to reduce their debt through Chapter 11. We will advise, research and explain legal remedies in terms that are clear and actionable.

To discuss your case, contact us by calling 859-759-4681. Our law firm ensures confidentiality. We graciously accept referrals from legal colleagues and former clients alike.

What is Chapter 11 Bankruptcy?

Federal bankruptcy laws govern how companies and organizations go out of business or recover from crippling debt. Many large companies file under Chapter 11 of the Bankruptcy Code rather than Chapter 7, because they can still run their business, control the bankruptcy process and attempt to become profitable again while seeking protection from their creditors.

Chapter 11 bankruptcy provides a process for rehabilitating a company’s faltering business.

As in other bankruptcies, an automatic stay applies to collection efforts by creditors. Management continues to run the day-to-day business operations, but all significant business decisions must be approved by a bankruptcy court.

The Bankruptcy Court can grant complete or partial relief of the company’s debts and contractual obligations. Typical debts and contracts which can be cancelled include:

  • Secured and unsecured loans
  • Real estate leases
  • Supply and vendor contracts
  • Loan contracts
  • Executory contracts.

The goal of the Bankruptcy Court is to help corporations and organizations avoid a cessation of operations. To this end, the court will review operations, explore a reorganization plan and halt the actions of creditors, vendors and lenders to create space for a corporation to find its footing and establish a path forward toward solvency and renewed effectiveness.

Starting the Chapter 11 Process

The first step is to hire a reputable law firm that is experienced in Chapter 11 cases and meet promptly with attorneys. There is little time to spare when a company’s debt load is onerous and mounting. The attorney will meet with corporate executives, explain the Chapter 11 process, answer management’s questions and begin to gather corporate documents needed to support a Chapter 11 filing. Every day throughout the legal process, your attorney will be available for consultation and guidance and will work hand in hand with management to make sure all tasks are handled effectively and with minimal interruptions business operations. The goal is to allow the company to maintain day-to-day operations in a normal fashion, despite the concurrent Chapter 11 legal proceedings.

Bunch & Brock Is an Exceptional Choice

There are a lot of law firms out there, but few achieve the level of client service exhibited by the attorneys at Bunch & Brock.  Our highly skilled lawyers have years of top-notch legal education and unparalleled courtroom experience. There are few legal matters that arise in a Chapter 11 proceeding that our attorneys haven’t dealt with in prior cases, which ensures there will be few, if any, unanticipated legal obstacles along the way.

With our care, a struggling business can restructure its finances and maximize the financial return to owners and creditors. Clients can rest assured that the significant professionalism and training of a Bunch & Brock Chapter 11 lawyer in Lexington will establish a level of trust that is reassuring. We welcome any initial inquiries and would be pleased to discuss our process and level of commitment.  Please call us at 859-759-4681.

Bankruptcy Court Controls Major Decisions

During the Chapter 11 reorganization process, corporate management maintains its leadership role and control over ordinary operations, but management gives up control over major decisions in the company. The Bankruptcy Court steps in and controls all major decisions.  Some of these significant decisions include:

  • entering into or failing to honor a lease of real or personal property
  • expanding or shutting down business operations
  • any sale of property or other assets (except for inventory sold by a retailer in the ordinary course of business)
  • any financing arrangements, including a mortgage, that allow the business to borrow money after the Chapter 11 case is filed
  • modifying or entering into vendor, union, licensing, and other agreements.

The purpose of this is to establish an independent arbiter (Bankruptcy Court) that makes prudent decisions while the Chapter 11 process moves forward toward completion.

Approval of the Chapter 11 Plan

Approval of a proposed Chapter 11 plan is referred to as “confirmation.” Ultimately, the Bankruptcy Court holds the power to confirm a proposed plan, and to do so the court must find that the reorganization plan meets several requirements, including:

Feasibility. The Bankruptcy Court must find that the proposed Chapter 11 plan is likely to succeed (is feasible). The struggling business must prove to the court that it has the ability to raise sufficient funds over the plan’s duration to meet its financial obligations going forward.

Best Interests of Creditors. To gain confirmation, the Chapter 11 plan must be in the best interests of its creditors. The “best interests” test requires that creditors receive at least as much under the Chapter 11 plan as they would if the struggling business’s case were converted to a Chapter 7 liquidation.

Good Faith. The Bankruptcy Court must determine that the Chapter 11 plan has been set forth in good faith and not by means prohibited under the law.

Fair and Equitable. The Chapter 11 plan also must be “fair and equitable,” which requires that:

  • Secured creditors must be paid, over several months or longer, at least the value of their collateral. A creditor is considered to be “secured” if it holds a mortgage against actual property or a lien against things like equipment and  inventory.
  • The company’s owners cannot retain anything of value because of their equity interests unless all other financial obligations are paid in full, either upon confirmation or over time.

What Are the End Results?

If the Bankruptcy Court approves a Chapter 11 plan of reorganization, the company will continue to operate as a sustainable business enterprise. If the company is unable to reorganize, the Bankruptcy Court may approve a plan of liquidation. This process may take anywhere from several months to more than a year.

Of course, the goal of Chapter 11 is to save the company by reducing its debt and eliminating some contractual obligations.  Many times, this is possible.  Under some circumstances, it is not.  In every case, the experienced Chapter 11 bankruptcy lawyers in Lexington at Bunch & Brock will skillfully and effectively advise management.

Contact Bunch & Brock, Attorneys at Law

Safeguard your business’s financial future by contacting an experienced Chapter 11 bankruptcy attorney at the law offices of Bunch & Brock.  We recognize that this is a challenging time for corporate executives as well as employees, and we will do all we can to create a smooth and efficient Chapter 11 process. We are here to answer your questions, counsel you on your options and facilitate a legal process that minimally impacts the company’s day-to-day operations. We are available for initial consultations at 859-759-4681.  We respectfully welcome your call.