Chapter 11 Bankruptcy Attorney St Cloud Minnesota

Chapter 11 Bankruptcy Attorney in St. Cloud, Minnesota

Sam Calvert has been practicing law in St. Cloud since 1978. He was formerly a member of the private panel of bankruptcy trustees for chapter 7 and a chapter 12 trustee. His bankruptcy practice now focuses on representing people in financial distress and individual or small businesses.

Chapter 11 cases are usually referred to as a "reorganization" bankruptcy. It is usually used by businesses, such as corporations, so I will discuss it that way. However, individuals are permitted to file a chapter 11 bankruptcy, and there are some differences with a corporate bankruptcy. Just like the other versions of voluntary bankruptcy, it begins with the filing of a petition with the bankruptcy court. Typically we file only a few of the necessary papers at the start of the case, and flesh out the papers shortly thereafter.

When the case is filed, the management of the company becomes a "debtor in possession." Until the case is dismissed or converted, or until a plan is confirmed, or until a trustee is appointed by the court, the debtor, as debtor in possession, operates the business. After the case is filed and the rest of the initial paperwork is filed, the United States Trustee holds a meeting of creditors. The debtor in possession must file periodic reports with the United States Trustee, and must pay a quarterly fee (based on a sliding fee schedule).

The filing of the case creates an “automatic stay” which forbids most creditors from taking collection action. The idea is to give the business time to get its plan together and work out a deal with creditors. Creditors can ask for relief from the stay in order to pursue collection action.

Immediate concerns in a Chapter 11 are the debtor’s right to use “cash collateral” which is cash or cash equivalents, obviously, but also includes proceeds, products, offspring, rents, or profits of property, and the hiring of professionals, such as attorneys and accountants, and the retention of key employees. We also have to provide “adequate protection” to secured creditors, which is cash payments to the creditor, or the giving of an additional or replacement lien that will result in the creditor's property interest being protected

In a “regular” Chapter 11 the United States Trustee often, or usually, appoints a creditors committee, usually made up of unsecured creditors who hold the largest unsecured claims against the debtor. The committee can investigate the debtor's conduct and operation of the business and participate in formulating a plan, can file attorney and other professionals, and otherwise act on behalf of creditors.

In a “regular” chapter 11 a written disclosure statement and a plan of reorganization must be filed with the court. The disclosure statement sets out information concerning the assets, liabilities, and business of the company. The plan separates claims into classes (typically, secured, priority, and unsecured) and sets out how each class will be dealt with if the plan is confirmed. Creditors whose claims are adversely affected vote on the plan. The court then holds a hearing to determine whether to confirm the plan. For a period of time only the debtor can file a plan. This period is called the “exclusivity period”.

There is a subset of Chapter 11 cases, called “single asset real estate debtor” which is subject to additional or different rules. “Single asset real estate" is defined as "a single property or project, other than residential real property with fewer than four residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental."

There is another subset of Chapter 11 cases, called a "small business case" or a Subchapter V case. The debtor must meet a debt limit. The debtor must attend an "initial interview" with the United States Trustee at which there will be discussion about the business and its chances for success. Timelines are different in a small business case. The idea behind a small business case is that the case should be quicker and cheaper.

When a plan is confirmed, the Bankruptcy Code says that the debtor is discharged from any debt that arose before the date of confirmation. After the plan is confirmed, the debtor is required to make plan payments and is bound by the provisions of the plan of reorganization, and creditor are likewise bound by the provisions of the plan. Usually we re-write the debts of secured creditors and provide for payments of a portion of the debt of unsecured creditors.

After the plan is confirmed, but before "substantial consummation" of a plan, the plan can be modified, subject to court approval.

After a plan is confirmed the case is still subject to the court action.

Once the case is fully administered the court enters a final decree, and we hope that the debtor lives happily ever after with its re-written debts.

Our Areas of Practice include:
Real Estate | Wills And Estate Planning | Bankruptcy | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy | Chapter 11 Bankruptcy | Business Bankruptcy | Bankruptcy Litigation

Sam Calvert, Attorney at Law offers Bankruptcy Solutions to clients across St. Cloud, Saint Joseph, Sartell, Sauk Rapids, Saint Stephen, Saint Cloud, Gilman, Rice, Holdingford, Stearns County, St. Joseph, Waite Park, Avon, Albany, Freeport, Richmond, Paynesville, Cold Spring, Roscoe, Rockville, Eden Valley, Watkins, Kimball, Fairhaven, South Haven, Annandale, Maple Lake, and Silver Creek, Minnesota.

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