Chapter 11 Bankruptcy

Chapter 11 is a less well known type of bankruptcy, otherwise known as a business reorganization.

There are two types of reorganization – chapter 11 and chapter 11 sub chapter 5.

Chapter 11 for small business

Our firm has been particularly successful utilizing chapter 11 in small business and taxi medallion cases. One of the main hallmarks of a chapter 11, is that it is a reorganization, not a liquidation, which allows Debtors to retain their businesses, property and assets and reorganize their debts, which often means paying a small percentage of the debt over a period of up to five years without interest.

Another great aspect of Chapter 11 Bankruptcy, is that any money “saved” or “forgiven”, in the course of the chapter 11 bankruptcy is not taxable as cancellation of debt income, as it is discharged at the end of the case. Therefore, even in cases where a settlement was or can be reached by parties outside of the court, chapter 11 is necessary in order to obtain a discharge of the deficiency, so that tax liability does not arise.

Chapter 11 can also be utilized for individuals who are not eligible for chapter 7 due to a high income, paid off properties, properties that have equity in excess of the applicable exemption amount, investment properties or active businesses. The unsecured creditors must receive payments in excess of what they would have received in liquidation, however after calculations, the vast majority of Chapter 11 Plans result in payments that are significantly less than those in a Chapter 13 Plan, or a private party settlement with a creditor. A chapter 11 may be filed for any type of business, and can be used to address tax debt, FLSA Labor Law claims, rental arrears, unsecured credit cards and credit lines, medical bills, restructure secured or under secured debts, effectuate property or business interest sales, mortgage modification or commercial loan workouts.

Taxi medallion loan settlements

Our firm has also been very successful in achieving taxi medallion loan settlements through the reorganization process, whereby the significant resulting tax liability is discharged, and only a small portion of the loan deficiency is paid off to the lender.

While very few small firms in the tristate area handle Chapter 11 reorganizations, this is a great tool for a vast category of cases that can help a business stay afloat, drastically reduce its’ debt, or for an individual debtor to pay a small percentage of debt and not incur tax liability therefor.

In any situation where you are told that you do not qualify for a Chapter 7 bankruptcy, you wish to keep your business going, but the debts are overwhelming, or your taxi medallion loan is in default and negotiations have stalled, a chapter 11 bankruptcy may be the way out.

Let us help you!

Call : (718) 513-3145

alla@kachanlaw.com

Are you looking for someone to help?

Let us help you! Call Now : (718) 513-3145

alla@kachanlaw.com