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Chapter 11 Law

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1.       Chapter 11 is the chapter of the US Bankruptcy Code, which provides protection to debtors. A chapter 11 bankruptcy can be applied to any business, whether organized as a corporation, sole proprietorship or individual with unsecured. It is a procedure of financial reorganization the business with a fresh start. The debtor in the chapter 11 is considered as “the debtor in possession”.  Generally, in this position the debtor has many creditors to pay and these creditors can also file the case of federal bankruptcy for the protection under either chapter 7 or chapter 11. The court appoints a trustee for the mismanagement took place in the business. This chapter can also be said as the beginning of the creation of a plan.

 

In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. This is done in accordance with statutory defined priorities. A chapter 11 filing, on the other hand, is usually an attempt to stay in business while a bankruptcy court supervises the "reorganization" of the companys contractual and debt obligations.

How Chapter 11 Works
A chapter 11 case begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. A petition may be a voluntary petition,
Which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements. A voluntary petition must hold to the arrangement of Form 1 of the Official Forms prescribed by the Judicial Conference of the United States. Unless the court orders otherwise, the debtor also must file with the court: schedules of assets and liabilities, A schedule of current income and expenditures, A schedule of executor contracts and unexpired leases; and A statement of financial affairs.For Expert consultation on Bankruptcy Law you can, take advice from Bankruptcy Lawyer or Bankruptcy Attorney in your area.

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