DCDM Law Group, PC and its team of seasoned business bankruptcy lawyers specializes in assisting small to medium sized companies reorganize their affairs through Chapter 11 bankruptcy. The multiple layers of rules governing Chapter 11 cases make business bankruptcies one of the most complex areas of law. Chapter 11 bankruptcy provides an opportunity for a company, whether formed as an LLC or a corporation, to maintain possession of its assets while renegotiating and altering the repayment terms for outstanding debt.
Chapter 11 business bankruptcy can be an advantageous way to turn around a company’s finances. The pressures management faces from pending lawsuits, defaults, default judgments, collection demands, bank and government levies can be too much to bear, causing attrition in the ranks you need most to reorganize as a profitable enterprise. By filing a corporate bankruptcy, the business can stay within the protections of chapter 11 bankruptcy for over a year, while the management focuses on reorganizing the company.
Some of the most successful companies to emerge out of Chapter 11 bankruptcy presented reorganization plans which paid the creditors 100% of the outstanding debts. That is in stark contrary to Chapter 7 bankruptcy liquidations, where the assets are being liquidated and creditors may be getting pennies on the dollar. Whether you are in Glendale Pasadena, Los Angeles, or in one of the surrounding communities in California (CA), getting help from the experienced bankruptcy lawyers at DCDM Law Group, PC can help ensure that the reorganization process goes smoothly whether you are in Glendale, Pasadena, Los Angeles or other cities in California.
DCDM Law Group represents clients in all areas of bankruptcy including:
Chapter 11 business bankruptcy is a common form of bankruptcy used by companies who have become overwhelmed with debts or who need time to handle their problems. Many major companies, including Kodak, American Airlines, General Motors, even “the Donald”, have sought protection under Chapter 11 bankruptcies, which gives the debtor the ability, keep the creditors at bay, while preserving cash flow to reinvest into the business. That ability to continue operating the business while reorganizing is one of the biggest benefits to debtors.
A bankruptcy reorganization is appropriate when a company wishes to continue its operations, rather than close its doors and liquidate its assets to repay creditors. A company that intends to cease operations would instead file under Chapter 7.
The Repayment Plan
In a reorganization, the debtor retains possession of is assets during the life of the Chapter 11 bankruptcy and will continue to operate as a going concern. The debtor will, however, need to create a plan to reorganize its debts. A number of different things may be included in this plan. For instance, staff may be cut, stores or plants may be closed, or creditors may be issued stock. Creditors will be given the opportunity to vote on the repayment plan in order to approve or deny the plan.
Shareholders, whose rights may be affected by the repayment plan and who may lose a large portion of their ownership interest as part of the bankruptcy process, are also given the opportunity to vote on the plan. However, priority given to shareholders is generally very low and the plan can go forward if the creditors approve it, even if the shareholders vote it down.
Restructuring Agreements and Transacting Business
Debtors have the right to reject most of the contracts in effect. This includes real estate leases and union agreements. The ability to renegotiate these agreements can often be instrumental in helping a business to turn around its negative financial picture and DCDM Law Group has extensive experience in advising clients on how and when to restructure business agreements.
Chapter 11 debtors are also limited to a certain extent regarding transactions they may enter into. For instance, while a debtor can continue in its normal course of operations, it cannot sell parts of the company, merge with other companies, sell property, buy property or otherwise make major business decisions without prior approval of the court.
For businesses that are serious about using chapter 11 to turn the business around and become profitable, DCDM Law Group is the right choice. In addition to the extensive bankruptcy experience possessed by the attorneys at DCDM, the firm’s founder is also a trained business coach who can provide, when necessary, specialized expertise in assisting clients in working to improve the success of their business.
By focusing on the right aspects of the business, by letting the bankruptcy laws keep the creditors at bay, and by working closely with clients as they navigate through the bankruptcy process, DCDM Law Group is able to give our clients a better shot at surviving bankruptcy and emerging as a profitable venture. Contact our experienced Pasadena corporate bankruptcy attorneys today to learn how we can help your business. We also serve those seeking a chapter 11 bankruptcy attorney or lawyer in Glendale, Los Angeles and neighboring communities.
A company seeks to reorganize when there is the potential to generate long-term revenue in excess of the liquidation value of its assets. If not, then it is more likely that the bankruptcy will be converted to a Chapter 7 liquidation. Because the company may have the potential to generate significant cash flow, the premise is that creditors will be repaid more when the business reorganizes than if the business filed for a chapter 7 liquidation bankruptcy.
A debtor must disclose all of its assets and it must make a complete list of all debts from which it is seeking protection for debt. Debts owed to creditors that are not included on the list will not be included in the bankruptcy. Creditors who own the included debts will be given the opportunity to raise objections or question the debtor as part of the creditor protections afforded under the United States Bankruptcy Code. At DCDM Law Group, we can assist you with every step of the reorganization process
The success of the bankruptcy and the ability of the business to turn its finances around and complete its repayment plan will determine how the business emerges from bankruptcy.
A company that is able to achieve greater financial success and become profitable will have the opportunity to emerge from Chapter 11 and resume normal operations. A business that fails despite the reorganization opportunity, that continues to be unprofitable and that cannot fulfill the terms of a repayment plan may end up having to close its doors when it is converted to a chapter 7.
The Office of the United States Trustee (UST) supervises all bankruptcy cases. The UST will review the information presented by debtors and creditors to assess the financial standing of the business and to determine if the business belongs in chapter 11. The US Trustee will also investigate to determine whether the current manager(s) have exhibited fraudulent behavior or have grossly mismanaged funds.
In the event that mismanagement or fraud is identified, a different trustee trustee will be appointed to manage operations and distribute and oversee company financials. This trustee is typically a separate party from the U.S. Trustee assigned to oversee bankruptcy cases.
The DCDM Law Group wants to help you be better informed about your available options for handling your legal issues. Schedule an appointment with one of our experienced attorneys today to discuss your case.