Information About Filing Chapter 11 Bankruptcy on Long Island
Is your business suffering from the burden of past business decisions? Do you believe that your business can operate profitably if you had some temporary relief from your pre-existing debt service? Richard S. Feinsilver has assisted many financially struggling businesses to recover from the crippling burden of overextended debt. As a Long Island Bankruptcy Lawyer who is well versed in Chapter 11 bankruptcy law, I have assisted numerous clients in Chapter 11 reorganization proceedings.
Chapter 11 of the U.S. Bankruptcy Code is primarily designed to assist businesses recovering from debilitating business decisions of the past. Chapter 11 bankruptcy allows businesses to continue to operate without the day to day burden of their pre-existing debt obligations, giving them the opportunity to develop a plan to restructure their debt as well as to possibly relieve them of certain burdensome leases and contracts.
In a typical Chapter 11 bankruptcy proceeding, management continues to run the day-to-day operation of the business. Certain significant business decisions, though, may require Court approval, such as the termination of certain agreements, or the sale of assets outside of the regular course of business.
Subchapter V – A Game Changer for Small Businesses
If you have less than $7,500,000.00 in business related debt (see below), and need bankruptcy relief to reorganize, Subchapter V may be a viable solution. Consider Subchapter V as a subset of a traditional Small Business Chapter 11 case. Subchapter V (“SubV”) is a streamlined version of Chapter 11 that could prove more effective for small businesses and individuals burdened with massive personal guarantees that are above the new limit for Chapter 13 bankruptcy ($2,750,000.00).
The key advantages are: (a) A SubV case is overseen by a Subchapter V Trustee, who can act as a mediator of disputes with creditors to assist a business to facilitate a plan. The costs associated with a SubV Trustee, if required, can be substantially less than the quarterly administrative fees payable to the Office of the United States Trustee in a traditional case. (b) The process can move much more quickly and prove less costly than a traditional case in that a business/individual is only required to propose a simplified plan of reorganization (not a disclosure statement) within 90 days of filing. Further, only the business or individual may file a plan, thus avoiding many of the battles which may take place when a creditor files a competing plan in a traditional case. Last. many SubV cases can be successfully completed in approximately 6-9 months, rather than 12-18 months in a traditional case. (c) Most importantly, while it is always the goal of Chapter 11 to have creditors agree to a proposed repayment plan, a new section of the Code – Section 1191(b) – allows a business to request that the Court confirm a plan over the objections of creditors so long as creditors are (i) receiving at least the liquidation value of the assets of the business (or non-exempt value of assets for an individual); and (ii) the plan proposes to pay creditors all of the disposable/net operating income generated in the 36-60 month period following the confirmation of a plan.
Special Notes: (a) Entities that are considered Single Asset Real Estate businesses cannot file SubV; and (b) An individual’s or entity’s business-related debts, including personal guarantees, must be more than 50% of its total debt (including mortgages) – this is a fine point that we can guide you through in light of the emerging case law in this arena.
Chapter 11 Bankruptcy Protection
Each Chapter 11 bankruptcy case is unique as each business has different dynamics. It is important to retain a bankruptcy attorney who is well versed in both practical business matters as well as the law. Richard S. Feinsilver has that experience as a former banking officer for a major lending institution.
If your business is located in New York’s Kings, Queens, Nassau, or Suffolk counties, and you need assistance with a Chapter 11 bankruptcy filing, contact the Law Office of Richard S. Feinsilver. We serve Long Island as well as Brooklyn and Queens. Let us assist you in designing a business plan to allow you to keep your business moving forward.