Chapter 11 Bankruptcy — What You Need To Know

Chapter 11 bankruptcy in Arizona, also known as a "reorganization" or "restructuring" bankruptcy, is designed for any business that needs time to get finances in order without worrying about creditors and lawsuits. If you are declaring personal bankruptcy, bankruptcy attorneys in Arizona generally advise that in most cases Chapter 7 or 13 bankruptcy is a better choice. At Judge Law Firm, we can help you understand what you need to know about bankruptcy to take the next best step forward.

Of the three main types of bankruptcy, Chapter 11 bankruptcy is the most complex and most expensive. That's why it's not usually recommended for individuals filing for bankruptcy.

The main advantage of Chapter 11 bankruptcy in Arizona is that it allows a business to continue operating while managers reorganize and develop a plan to pay creditors back. The Chapter 11 status prevents creditors from collecting collateral or attempting to collect debts, including filing lawsuits, during the bankruptcy. By contrast, Chapter 7 bankruptcy for a business generally means the business stops operating and all of the business's assets are sold to pay off creditors.

Your Reorganization Plan For Chapter 11 Bankruptcy In Arizona

A bankruptcy in Arizona requires the debtor to adhere to a plan for reorganizing the business and paying its creditors. For the first 120 days (in most cases) the debtor has exclusive right to submit this plan. After that time frame, creditors or any other party with interest in the business may also file a plan for consideration.

Reorganization plans must adhere to several criteria in order to be considered by the court. To be sure your proposed plan meets these criteria; it's a good idea to hire a bankruptcy attorney. In Arizona, the creditors must vote to approve a reorganization plan and if no plan is approved, the court can convert the case to Chapter 7 and liquidate the business.

Chapter 11 And The Small-Business Debtor

If your business has total debts of $2.19 million or less, and is not primarily engaged in owning or operating real estate, you could qualify as a small-business debtor when you file Chapter 11 bankruptcy in Arizona. A bankruptcy case designated as a small-business case usually proceeds more quickly. That's because the deadlines are different and extensions on deadlines are more difficult to obtain.

A small-business case also does not require appointment of a creditors' committee and can be advantageous when it's difficult to get enough willing representatives of creditors. However, a small-business debtor is subject to additional oversight by the U.S. trustee assigned by the bankruptcy court.

Alternatives To Chapter 11 When Declaring Personal Bankruptcy

If you are declaring personal bankruptcy but prefer a reorganization or debt management plan to liquidation, your best option is probably Chapter 13 bankruptcy, which is intended to meet the needs of individuals filing for reorganization bankruptcy. Liquidation bankruptcy is covered by Chapter 7 bankruptcy, which applies to both individuals and businesses. For more information on your best alternative to Chapter 11, click the link below:

Personal bankruptcy alternative to Chapter 11 bankruptcy in Arizona: Chapter 13

If you're ready to speak to bankruptcy attorney Jeffrey Judge about your alternatives to filing for Chapter 11 bankruptcy in Arizona, fill out our introduction form for a detailed bankruptcy consultation.

Or call the Judge Law Firm today at 520-815-0281 for your consultation with a lawyer.

We are a debt relief agency. We help people file for relief under the Bankruptcy Code.