Business Bankruptcy (7 or 11) 

Business bankruptcy, often known as Chapter 11, is a way for a business to reorganize, to restructure its debts, and to get relief from some contracts. It's for businesses that are facing severe financial difficulties but can still stay viable — if its debts can be paid to some extent at some time. A business bankruptcy can be used to restructure and pay debts, and it can also be used to liquidate the assets of a business to pay creditors.

During the business bankruptcy process, the business can continue to operate, but it must operate under supervision from the Bankruptcy Court and its appointee. Legal Objective represents Southern California businesses and clients seeking a fair, effectively handled bankruptcy.

Candidates for Business Bankruptcy

Chapter 11 bankruptcy is available to corporations, LLCs, partnerships, and even sole proprietorships. It's not the only option for a business in financial trouble, but it may be right for you. At Legal Objective, we will explore your circumstances in depth with you, and advise you of all of your options.

Bankruptcy in Southern California

The U.S. Bankruptcy Court, Southern District of California has two division offices, one each in San Diego and Imperial counties. A business that is filing a Chapter 7 or a Chapter 11 bankruptcy in Southern California will have its bankruptcy processed through one of these two offices. The San Diego County office is in the city of San Diego, downtown.

Developing a Reorganization Plan

The business seeking the bankruptcy, also referred to as the debtor company, must develop a reorganization plan to deal with its debts and obligations, by working with one or more committees that represent the interests of the company's:

• creditors
• stockholders
• bondholders

Legal Objective will help a client with its reorganization plan and its disclosure statement if one is necessary. These documents are filed with the Bankruptcy Court. The creditors, stockholders, and bondholders (if any) must approve of the debtor company's plan, too. If the company is publicly held, the reorganization plan will be reviewed by the Securities and Exchange Commission.

The Bankruptcy Court's Review and Approval

The Bankruptcy Court will then review the reorganization plan, in part to ensure that it complies with the U.S. Bankruptcy Code. This step, the "plan confirmation," can take months, or in the case of large and complex bankruptcies, even years.

Chapter 7 Bankruptcy

Businesses are also entitled to file a Chapter 7 bankruptcy; these are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, LLC or a partnership. A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in Chapter 11 or 13. Instead, the bankruptcy trustee gathers and sells the businesses nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. A corporation or LLC will be forced to cease operations and dissolve the business entity to be afforded a discharge in a Chapter 7 bankruptcy.

The First Step—Contacting Legal Objective

Of course, there is much more detail to consider in bankruptcy law and procedure, and every business bankruptcy is unique. Contact the Carlsbad, California office of Legal Objective to explain your circumstances and explore your options, in a confidential, no-commitment consultation.

Carlsbad Office

2544 Campbell Place, Ste 100
Carlsbad, California 92009

Tel: (760) 431-2200
Fax: (760) 431-2244

San Diego Office

402 West Broadway, Ste 400
San Diego, California 92101
Tel: (619) 295-1300

 

Orange County Office

Tel: (949) 363-7100

 

Temecula/Riverside Office

Tel: (951) 341-5000