Minnesota chapter 11 bankruptcy

Chapter 11 bankruptcy is a good option for some businesses that are having a hard time paying bills as they come due and need a chance to restructure their obligations. Filing a chapter 11 bankruptcy is a complex and time consuming process and should not be entered into lightly. A chapter 11 bankruptcy takes a lot of commitment from the management of the company, since the process will require a lot of communication with the business to formulate a plan to work with all the creditors.

The process starts with filing a petition and schedules. The information on the schedules will include business income, expenses, debts, assets, lawsuits, and a great deal of other information. Once the schedules are completed the U.S. Trustees office will set up a 341 meeting that the Debtor will need to attend and any creditors of the bankruptcy estate will also receive notice to attend. During this process the Debtor in Possession ("DIP") will begin work on creating a plan of reorganization and a disclosure statement that needs to be filed with the court and approved by creditors. The time limits for filing a plan of reorganization vary depending upon the type of chapter 11 bankruptcy, but typically the plan needs to be filed 120 days after the filing of the petition.

If the DIP survives all the lift stay motions and other pitfalls presented by the debtor’s creditors, they will get a bankruptcy plan confirmed, and provided they fulfill their terms of the agreement the creditors will also be bound by the terms of the plan. A chapter 11 process can benefit a business and provide some breathing room from creditors, and eventually result in a viable plan that could save the business.