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Are You Considering Filing Chapter 11 Bankruptcy In New Jersey?

If so, please take a few moments to look over the information on this page. If you'd like to contact an attorney immediately, fill out the form on the right side of this page or call our client-intake specialist, Ken Cooper, at (856) 308-5426.

What is Chapter 11 bankruptcy?

If a company cannot service its debt or pay its creditors, it can file for bankruptcy under either Chapter 7 or Chapter 11. With Chapter 7, the business sells off all its assets to satisfy its creditors and then goes out of business. With Chapter 11, the business reorganizes its operations in hopes that it will increase its net cash flow.

Businesses choose Chapter 11 when they believe the value of the business is greater than the sum of having its assets sold off individually, and an effective plan of reorganization can be put together to satisfy its creditors. With Chapter 11, the business continues to operate, employees keep their jobs, and the profitable aspects of the business are retained. The end goal is that with restructuring, the company will be able to eliminate some of its debts and emerge from Chapter 11 as profitable.

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Who can file a Chapter 11 bankruptcy?

Chapter 11 is available for anyone who is eligible for Chapter 7 filings. Individuals (except stockbrokers) can file for Chapter 11, but it is extremely expensive and time consuming. Chapter 11 is usually filed by businesses looking to reorganize and continue to operate.

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What are the steps to declaring bankruptcy?

  1. Choose to file bankruptcy. Businesses should only file bankruptcy if they have no other options. If you decide to go ahead, you must choose between filing either Chapter 7, which involves liquidating your assets, or Chapter 11, which involves restructuring the business.

  2. Hire an attorney. In most cases, you'll want to speak with an attorney before you file for bankruptcy. An attorney will explain the bankruptcy process and help you deal with creditors. New Jersey law prohibits creditors from harassing you, calling you at unreasonable hours or at work, or telling your friends, relatives and employers about your debt. Once you retain a lawyer, creditors may only speak to your lawyer.

  3. Start bankruptcy filings. To file for bankruptcy, you must go to the courthouse and fill out bankruptcy forms detailing your financial history. Once the business files the Chapter 11 petition, they receive an automatic stay, which means that no creditor is allowed by law to take action against you.

  4. Managing the business. When you file for bankruptcy, the Bankruptcy Code allows you (the "debtor in possession") to retain control of the business until a reorganization plan is set up, the bankruptcy is converted to Chapter 7, or a Chapter 11 trustee is appointed.

  5. Working with the Creditors' Committee. In most cases, a creditors' committee consisting of unsecured creditors who hold the largest unsecured claims against you. This committee may consult with the debtor in possession on the administration of the case, investigate your conduct and how your business operates, and participate in the formulation of a plan of reorganization.

  6. Filing a Plan of Reorganization. After the order for relief, you have between 120 and 180 days to formulate and file a plan of reorganization with the bankruptcy court. This plan must explain how the company hopes to return to solvency, clearly explain what each creditor will receive, and provide a means for execution. If you fail to submit a plan during the 120 days, then any creditor can then submit a plan.

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Do small businesses have faster option?

Yes, businesses with debt less than $2 million can elect to be treated as a "small business." In such cases:

  • The separate hearing to approve the disclosure statement can be combined with the confirmation hearing.
  • The appointment of a creditors' committee is not mandatory.
  • The debtor has 100 days from the date of the order of relief to file a plan.
  • After the 100 days, any party involved has an additional 60 days to file a plan.

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Do I need to hire a bankruptcy lawyer?

Under most circumstances, if you file bankruptcy, you will benefit from consulting with a bankruptcy attorney. Your lawyer will help you calculate the value of your assets, evaluate options to keep your home, car, and other personal assets, and keep creditors from calling you directly. Once you hire an attorney, creditors are required by law to only contact your attorney.

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When do companies emerge from Chapter 11?

Companies emerge from Chapter 11 after the court approves the company's plan of reorganization and the transactions and payment proposed in the plan have been completed. This can take a few months to several years depending on the company's size and the complexity of the bankruptcy.

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What happens to publicly traded stock?

Once Chapter 11 is filed, the company's stock is usually de-listed from its primary stock exchange if it was listed on the New York Stock Exchange, the American Stock Exchange, or the NASDAQ. The NASDAQ identifies companies in bankruptcy with the fifth letter "Q" at the end of the stock symbol. In many cases, de-listed stocks resume listing as over the counter (OTC) stocks.

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What are the attorney's fees?

Your initial consultation is free. Once you have spoken with one of our lawyers, we will estimate a fee based on the nature and complexity of your case. We offer flexible payment plans and can accomodate the needs of most people.

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How do I get started?

Please fill out the Free Case Evaluation form on the top right side of this page and we will respond within 24 hours. If you wish to speak with someone immediately, call our client-intake specialist, Ken Cooper, at (856) 308-5426.

Disclaimer: While the use of this website does not form or imply an attorney/client relationship, we will treat all personal information with the strictest confidentiality and will never disclose it to anyone.

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Free Case Evaluation

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