New Jersey Chapter 11 Bankruptcy Lawyer
Chapter 11 is a federal statute, so in New Jersey, the question is whether one takes the federal exemptions or the state exemptions. In this state, the exemptions are paltry, so one always wants to go with the federal exemptions. An exemption is the first dollars that are reserved in some sort of asset that goes to the asset holder. For example, if one owns a large chunk of land, the first X amount of dollars goes to the asset holder. The remaining dollars potentially go to the creditors.
If you are considering bankruptcy, consult with a New Jersey Chapter 11 bankruptcy lawyer for assistance. A qualified attorney could provide sound advice for what to do in your situation and help you navigate the complexities of bankruptcy law.
Purpose of Chapter 11 Bankruptcy
The purpose of Chapter 11 bankruptcy is for businesses that want to reorganize their debt structure. Sometimes they have an inordinate amount of debt. A good example might be a diner that owes a large amount of money to various suppliers because of disruptions in the supply chain that they did not bank and which bumped up the price of their anticipated fixed cost. It happens month after month and starts to eat at the bottom line. It gets to the point that they are no longer able to financially function until they correct the financial debt structure problems. For the most part, Chapter 11 bankruptcy is a financial restructuring of a business.
Qualifying for Chapter 11 Bankruptcy
The types of individuals or groups that could file for Chapter 11 bankruptcy include higher net worth individuals and any businesses, depending on their debt structure. For someone who is a day trader, it is not unheard of for them to have high levels of debt that is constantly turning. Any business could file a Chapter 11, from large multi-national corporations to small businesses. It really has to do with the amount of debt that is being restructured or the type of entity that is filing for bankruptcy.
Theoretically, there are no types of people that could not file for Chapter 11 bankruptcy. Realistically, it comes down to the level of debt. If they do not have enough debt, they would have to file a Chapter 13 or even a Chapter 7, depending on what their end goal is. For more information about qualifying for Chapter 11 bankruptcy, contact a New Jersey Chapter 11 bankruptcy lawyer.
How Long Does a Bankruptcy Case Take?
There are two types of Chapter 11 bankruptcy case. There is a pre-packaged Chapter 11 in which one negotiates with all the creditors in advance. In these cases, they go into court, they file, and they have their first-day motions. Those types of Chapter 11s generally last approximately three to four months, but the work that is included prior to filing is much more substantial.
For a normal Chapter 11 bankruptcy, the average time from filing to closing is one to three years. However, it is important to note that every case is different, and in some circumstances, it could go up to five years.
Fees Associated with Chapter 11 Cases
The kinds of fees associated with this process include a filing fee, which is approximately $1,000, and fees associated with a Chapter 11 trustee if that is warranted, which is worked out in advance if one has a pre-packaged Chapter 11.
If they have a regular Chapter 11, it is decided upon by the creditor committee and is a percentage of the monies that are going through that trustee’s hands. Generally, it is about 10 percent, but every case is different. It could be more or it could even be less. There are also various other fees associated with negotiating the various committees. There are first-day motions, but the larger fees are the filing fee, which is approximately $1,000, and the trustee fee, which is approximately ten percent.
Alternatives to Chapter 11 Bankruptcy
An alternative for those who could not afford these fees is to liquidate their business or their household debt structure through a Chapter 7. Everyone could file a Chapter 7. Chapter 7 is the lowest common denominator, meaning everybody is able to turn to it. It is pure liquidation of all their debts and assets.
Meet With a New Jersey Chapter 11 Bankruptcy Attorney
To prepare for filing a Chapter 11 bankruptcy, individuals should meet with the attorney, and the attorney could make the call as to whether they meet with a debt specialist. They may even need a forensic accountant if there are issues with bleeding money or capital assets that are being depleted quicker than they should be. They need to meet with their attorney, and they should have good relations with their suppliers and vendors.
If you are advice on bankruptcy for your business, reach out to a New Jersey Chapter 11 bankruptcy lawyer today. An attorney could analyze your situation and provide legal advice as to the best course of action.