The Chapter 11 Bankruptcy is one designed for businesses and high net assets cases. Well known examples of Chapter 11 bankruptcies are United Airlines and, more recently, Circuit City.

The goal of a Chapter 11 Bankruptcy is to help the debtor "reorganize" their debt to keep the business operational or to keep the personal assets intact. The Chapter 11 Bankruptcy is not a guarantee of success but an opportunity to try. For example, United Airlines emerged a leaner and profitable (relatively speaking) company. However, Circuit City announced that it would liquidate and close its stores.

An individual Chapter 11 Bankruptcy usually falls into two categories. An individual who has just enough assets to disqualify them from a Chapter 13 Bankruptcy to a regular Chapter 11 filing. A "mini" Chapter 11 bankruptcy is best described as a Debtor who owns an asset (usually a house) that exceeds the Chapter 13 secured debt limit of $1,010,650.00 or the unsecured debt limit of $336,900.00. The high debt prevents a Chapter 13 Bankruptcy plan approval, so the debtor must file for a Chapter 11 even though their overall goal of a payment plan is similar to the Chapter 13.

In a regular Chapter 11 Bankruptcy, the Debtor uses the reprieve from creditors to reorganize their debts into a healthier and reasonable payment plan.

It is best to consult with an attorney to see if your situation requires a Chapter 11 Bankruptcy.

In a chapter 11 bankruptcy is difficult to predict precisely how long a it may take to get to completion because it is so dependent on the reorganization plan. The reorganization plan needs to be accepted by all the creditors as well as the trustee before it gets implemented. Depending the size and the complexity of the of the bankruptcy and the assets involved, debtors may come out of the bankruptcy within a few months, or it may take several years. The reason for the time discrepancies is because, at first, debtors have the exclusive right of proposing a plan within 120 days of the filing. After a certain amount of time, the creditors are then allowed to propose their plans for reorganization. The reorganization plan, whatever is chosen, needs to be confirmed by the bankruptcy court. The creditors then need to vote and approve the plan. If the plan is confirmed, then the debtor follows the repayment plan until the debt is completely paid. If the plan is not confirmed then the court looks to other options for the debtor. Some options include converting the Chapter 11 into a Chapter 7 and liquidating the assets. Or in some cases, dismissing the case, and returning the debtor back to whatever their status was before the bankruptcy. Therefore, the timeline is definitely different with each case depending on the assets involved and the difficulty.

Retaining an Attorney to file for Chapter 11 Bankruptcy

Ideally, since a Chapter 11 bankruptcy is a little more complicated than a liquidation bankruptcy like Chapter 7, a debtor should seek the advice of an attorney. Calling a bankruptcy attorney and getting a consultation on your case is the best way to go about it. If the debtor feels that a bankruptcy is the right decision for them, they will sign a retainer agreement with the law firm and the firm will then begin drafting the petition and filing it with the proper court.