Chapter 11 Bankruptcy in New Jersey
Do You Have a Significant Amount of Debt?
Chapter 11 bankruptcy is often thought of as the commercial bankruptcy option for businesses, sole proprietors and partnerships seeking to restructure their debts while they liquidate assets and restructure payment plans with creditors. Individuals with more than $1 million in secured debt and $330,000 in unsecured debt may also take advantage of the provisions of Chapter 11 bankruptcy.
What Can Chapter 11 NJ Bankruptcy Do?
A chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company's stock.
A sole proprietorship (owner as debtor), on the other hand, does not have an identity separate and distinct from its owner(s); accordingly, a bankruptcy case involving a sole proprietorship includes both the business and personal assets of the owners-debtors. Like a corporation, a partnership exists separate and apart from its partners. In a partnership bankruptcy case (partnership as debtor), however, the partners' personal assets may, in some cases, be used to pay creditors in the bankruptcy case or the partners may, themselves, be forced to file for bankruptcy protection.
Section 1107 of the code places the debtor in possession in the position of a fiduciary, with the rights and powers of a Chapter 11 trustee, and requires the performance of all but the investigative functions and duties of a trustee. These duties are set forth in the Bankruptcy Code and Federal Rules of Bankruptcy Procedure.
Such powers and duties include accounting for property, examining and objecting to claims, and filing informational reports as required by the court and the United States trustee, such as monthly operating reports. The debtor in possession also has many of the other powers and duties of a trustee including the right, with the court's approval, to employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during its bankruptcy case.
Other responsibilities include filing tax returns and filing such reports as are necessary or as the court orders after confirmation, such as a final accounting. The United States trustee is responsible for monitoring the compliance of the debtor in possession with the reporting requirements in a small business case. A small business case proceeds faster than a regular chapter 11 case because the court may conditionally approve a disclosure statement, subject to final approval after notice and a hearing and solicitation of votes for acceptance or rejection of the plan.
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Scura, Wigfield, Heyer, Stevens & Cammarota, LLP, can be your complete bankruptcy law firm. We serve individuals and owners of privately held corporations throughout eastern New Jersey and the New York City metro region.
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