Chapter 11 Bankruptcy Lawyers Knoxville

Who can file a Chapter 11 bankruptcy in Knoxville?

Companies of all sizes can file for Chapter 11. Usually large corporations and partnerships file but small businesses including sole proprietorships can also file for Chapter 11.

There are specific eligibility criteria, such as Small Business Reorganization Act of 2019 criteria, that affect small business eligibility. Our Knoxville Chapter 11 bankruptcy lawyers will explain this criteria to you. For example, the criteria include shorter deadlines for completing the bankruptcy, more flexibility for negotiating with creditors, and “provides for a private trustee who will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization.”

Who can operate the business during Chapter 11 filings in Knoxville?

In Chapter 11, the filer is called a “debtor in possession.” As Investopedia explains, the debtor in possession can normally continue to run the business. A trustee will be appointed to run the business in cases involving fraud, dishonesty, or gross incompetence.

Many business decisions will need permission from the bankruptcy court. These decisions include selling assets (other than inventory), beginning or ending a rental agreement, and ending or expanding business operations. The bankruptcy court must also approve “decisions related to retaining and paying attorneys and entering contracts with vendors and unions.” A Chapter 11 filer cannot “arrange a loan that will commence after the bankruptcy is complete.”

How does the reorganization plan work in Knoxville?

According to the US Courts, in addition to filing a voluntary Chapter 11 petition, you must also file:

  • Schedules of assets and liabilities
  • A schedule of current income and expenditures
  • A schedule of executory contracts and unexpired leases
  • A statement of financial affairs. Fed. R. Bankr. P. 1007(b)

Per the website:

If the debtor is an individual (or a married couple filing jointly), there are additional document filing requirements. Such debtors must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. 11 U.S.C. § 521. A married couple may file a joint petition or individual petitions. 11 U.S.C. § 302(a).

Investopedia states that the business or person that files for Chapter 11 is given the first opportunity to propose a reorganization plan – to pay the creditors. A reorganization plan can include downsizing operations and renegotiating debts. Some assets may need to be sold. If the bankruptcy court approves the plan, then the business owner will continue operating under the terms of the plan.

How does Chapter 11 differ from Chapter 7?

Chapter 7 is normally used for individuals with unsecured debts. A trustee is appointed to represent the creditors. Some priority debts cannot be discharged. People can keep some “exempt” property. Normally, businesses who want to continue their business file Chapter 11. Businesses that are ready to cease operations file Chapter 7.

What are the advantages of filing Chapter 11 in Knoxville?

The advantages of Chapter 11 for businesses are:

  • You usually stay in control of your business, instead of the business or assets being sold. Being in control of their business is often critical to generating the flow of cash (mostly by sales of inventory or services) needed to pay the creditors.
  • Creditors generally favor Chapter 11 as compared to Chapter 7 because they have a better chance of receiving more of their debt amount. As such, they may be more agreeable to signing off on your reorganization plan.

What are the disadvantages of filing Chapter 11 in Knoxville?

Chapter 11 bankruptcy is generally much more expensive than filing for Chapter 7. Chapter 11 is also more complex – there are more requirements for staying in compliance. You’ll need to submit a plan and persuade the bankruptcy court to accept the plan on behalf of the creditors. The plan must be a viable plan. Some businesses can meet the terms of a reorganization plan. Some businesses are just delaying the inevitable need to close their business and sell the business and/or the assets of the business.

Do you have a Knoxville Chapter 11 lawyer near me?

LaFevor & Slaughter is located at 900 South Gay Street, Suite 2006, in Knoxville. We maintain an additional office in Maryville. We also consult with clients by phone through video conferences. We’ll meet you at your place of business when necessary. Our lawyers explain whether Chapter 11 bankruptcy is the correct option for you.

Speak with a respected Knoxville Chapter 11 bankruptcy lawyer today

Running a business is difficult in good times. When the bills start to accumulate and creditors start to call, LaFevor & Slaughter is ready to discuss your financial options. Our Knoxville bankruptcy attorneys will explain how Chapter 11 can help you stay in business so you can take care of your family and your employees. We’ll help your business prepare a reorganization plan and negotiate with your creditors. Call us or fill out our contact form to schedule a consultation.