Illinois businesses may be familiar with a form of bankruptcy that allow
a business to reorganize debt and refinance it in order to prevent final
liquidation. While some individuals qualify for Chapter 11 bankruptcy,
it most often involves businesses. Chapter 11 permits a business to continue
running its day-to-day operations while seeking a way to pay creditors.
There are certain requirements in place for all bankruptcies that prohibit
filing. If a prior filing was dismissed during the previous 180 days because
the debtor was not present in court, ignored court orders or if the previous
filing was enjoined by lien-holding creditors, the debtor may be unable
to file. An individual debtor must be able to show that credit counseling
was obtained from an accepted source, although some exemptions are allowed
in an emergency situation.
Chapter 11 bankruptcy may be voluntarily initiated by the debtor, or involuntary,
started by creditors. The debtor must provide the court with a list of
all assets and liabilities, all contracts in which both parties have continuing
obligations, all unexpired leases, disbursements and income and a financial
statement. The bankruptcy court may charge filing and administration fees.
These fees may be paid when the petition is filed or in installments at
the discretion of the court.
The petition filed by a business must include the tax identification number
of the debtor and the location of its principal assets. The debtor either
files a plan for restructuring debt that enables the court and creditors
to make informed decisions or notifies the court such a plan will be forthcoming.
Devising a reorganization plan is complex and may benefit from an attorney's
insight. This plan must be approved by the court and creditors, and an
attorney's guidance may help achieve that end.
Source: United States Courts, "
Reorganization Under the Bankruptcy Code", September 26, 2014