Knoxville Chapter 11 Attorneys

Trusted Bankruptcy Solutions for East Tennessee Businesses

If your business is at risk of closing down because of significant financial burdens, you are not alone. Recently, thousands of companies have had to seek solutions for debt relief. At the Law Offices Of Mayer & Newton, we have helped many of those companies find the relief they need through filing for Chapter 11 bankruptcy. Although this form of bankruptcy is more complex than others, such as Chapter 7 and Chapter 13, it is often an effective way for companies to not only restructure their debts and remain in business, but also make the company profitable again.

What You Will Learn on This Page 

• Understanding Chapter 11 Bankruptcy
• Benefits of Chapter 11 for Your Business
• Utilizing SubChapter 5 for Small Businesses

Take Control of Your Business’s Future – Don’t let debt force you to close. Contact us today at (865) 328-7993 for a free consultation and find out if Chapter 11 is right for you.

Understanding Chapter 11 Bankruptcy

Chapter 11 gives business owners the opportunity to reorganize their debts, assets, and affairs in pursuit of a fresh start. It involves proposing a plan of reorganization to pay back creditors over time. Although Chapter 11 is the most complex of all bankruptcy options, and only entered into after all other options have been exhausted, it has enabled many business owners to escape scenarios of overwhelming debt and end up in a position of financial security.

Benefits of Chapter 11 for Your Business

If your business has failed to make a profit over the course of several consecutive months, then filing for Chapter 11 might be the right path to get you out of debt.

There are several benefits of filing for Chapter 11 bankruptcy, including:

• Restructure your debts into lower monthly payments
• Make a partial repayment on your unsecured debts
• Keep your business open as you pay back your creditors
• Remain in control of business operations
• Maintain your good name and clientele base
• Receive reduced rates on high-interest loans
• Extend payments of unsecured tax debts for up to five years
• Sell your property free and clear of interests and liens
• Cancel debt acceleration obligations for defaults
• Prevent debt collection activity
• Put an end to creditor harassment
• Avoid bank levies, foreclosures, repossessions, and lawsuits

Utilizing SubChapter 5 for Small Businesses

If you are one of the many businesses that has been affected by the COVID-19 pandemic and resulting economic downturn, there's good news. The Small Business Reorganization ACT (SBRA) has made some provisions that make it easier for businesses to file for Chapter 11 bankruptcy. SubChapter 5 has been initiated to expedite small business bankruptcy proceedings and make the filing process more affordable.

Eligibility for Chapter 11 Bankruptcy

If your business is struggling with overwhelming debt but you want to keep it open, Chapter 11 bankruptcy may be a good option. This type of bankruptcy is designed for businesses that need to restructure their debt while continuing operations.

What Types of Businesses Qualify?

• Corporations, LLCs, partnerships, and sole proprietorships can file.
• Small businesses and large companies alike may qualify.
• Even individuals with significant business-related debts may be eligible.

When Is Chapter 11 the Best Option?

Chapter 11 is typically a good choice when:

• Your business has significant debt but is still generating revenue.
• You want to avoid liquidation and keep your business open.
• You need time to reorganize debts and negotiate better repayment terms.
• Other debt relief options, such as Chapter 7 or Chapter 13, are not suitable.

Differences Between Standard Chapter 11 and SubChapter 5

• Traditional Chapter 11: Often used by large businesses, involves a complex and lengthy process.
• Subchapter 5: A faster, more affordable option designed for small businesses with debt under a certain limit.
• Subchapter 5 simplifies the process by reducing paperwork and costs, making it easier for small businesses to restructure.

The Chapter 11 Bankruptcy Process

Filing for Chapter 11 can seem overwhelming, but understanding the steps can make the process clearer.

Step-by-Step Breakdown of Filing

• Prepare financial documents – Gather business records, debts, and assets.
• File a petition – Submit paperwork to the bankruptcy court.
• Automatic stay begins – Stops creditors from collecting debts.
• Develop a reorganization plan – Outline how debts will be repaid.
• Court approval – The plan must be approved by creditors and the court.
• Implementation – Your business follows the new repayment plan.

Timelines and What to Expect

• The entire process can take several months to a few years.
• SubChapter 5 cases are usually resolved within 3 to 6 months.
• Regular reports to the court may be required.

The Role of the Bankruptcy Trustee

• Oversees the case and ensures compliance.
• Reviews financial documents and repayment plans.
• Helps resolve disputes between the business and creditors.

Costs and Fees Associated with Chapter 11

Filing for Chapter 11 bankruptcy involves legal and administrative costs.

Filing Fees and Legal Costs

• Court filing fees typically range from $1,738 to $2,000.
• Attorney fees vary based on case complexity but often range from $10,000 to $50,000 or more.

How Attorney Fees Are Structured

• Some attorneys charge flat fees for specific services.
• Others work on an hourly basis.
• Payment plans may be available for businesses with financial hardship.

Options for Businesses Struggling with Legal Expenses

• Some attorneys offer flexible payment plans.
• Businesses may qualify for reduced-cost legal aid.
• Exploring SubChapter 5 may help lower overall costs.

Frequently Asked Questions About Chapter 11 Bankruptcy

Will I lose control of my business if I file for Chapter 11?

• No, in most cases, you remain in control of your business as a "debtor in possession." This means you continue to operate while working on a repayment plan. However, major business decisions may require court approval.

Can I still get business loans after filing for Chapter 11?

• Yes, but it may be more challenging. Some lenders specialize in providing financing to businesses in bankruptcy. You may need court approval before taking on new debt.

How does Chapter 11 affect my personal credit?

• If you operate as a sole proprietor, your personal credit may be impacted. However, if your business is a separate legal entity (like an LLC or corporation), your personal credit may not be directly affected unless you have personally guaranteed business debts.

Can Chapter 11 help me break bad contracts or leases?

• Yes, Chapter 11 allows businesses to renegotiate, modify, or even cancel certain contracts and leases if they are deemed financially burdensome.

What happens if my reorganization plan is not approved?

• If creditors or the court reject your plan, you may have to modify it. If a workable plan cannot be reached, your case may be converted to a Chapter 7 liquidation.

Can I switch to a different type of bankruptcy if Chapter 11 isn’t working?

• Yes, under certain circumstances, you may be able to convert your case to Chapter 7 (liquidation) or Chapter 13 (if you qualify as an individual with business debts).

Will my customers and employees find out about my bankruptcy?

• Chapter 11 is a public legal process, so records are available. However, many businesses continue operating with minimal disruption, and customers and employees may not be directly affected.

Schedule Your Free Consultation with Our Knoxville Attorneys

With the institution of SubChapter 5, there has never been a better time to file for Chapter 11 bankruptcy. If you are struggling to keep your business alive, please reach out to The Law Offices Of Mayer & Newton to discover if this form of bankruptcy is right for you. Our Knoxville Chapter 11 attorneys have your best interests in mind and are committed to helping you make an informed decision about your future.

Get the Debt Relief Your Business Needs – Our experienced attorneys are ready to help. Contact us at (865) 328-7993 to discuss your options and start your path to financial stability.