Denver Chapter 11 Bankruptcy Lawyer

Denver Ch 11 Bankruptcy Attorney

A Chapter 11 bankruptcy is similar to a Chapter 13 bankruptcy because it also involves a plan for reorganization. But fewer than 100 Chapter 11 cases are filed in all of Colorado each year compared to 10,000 Chapter 7 cases and  2,500 Chapter 13 cases. This shows that Chapter 11 cases are not that common in Colorado. To see if you need to file a Chapter 11 bankruptcy, you can hire an experienced lawyer to review your case.

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The Difference Between Chapter 11 and Chapter 13 Bankruptcy

A Chapter 11 is usually used to reorganize a corporation, business, sole proprietorship, or partnership. If a sole proprietorship is involved, then the bankruptcy case includes the business and the personal assets of the owner (debtor). Personal assets may also be included in a bankruptcy case involving a partnership.  In some situations, the partners in a partnership may be forced to file for bankruptcy protection.

Cost of a Chapter 11 Bankruptcy in Denver

Since Chapter 11 Bankruptcies are very complex, they can be very expensive.  In most cases, a normal small business would struggle to pay the fees for a Chapter 11. This why individuals that choose to file a Chapter 11 are usually real estate investors with more than $1.02 million in mortgage debt, and professionals (doctors, lawyers, accountants) that own their own firms. Small businesses that have too much secured debt compared to the value of their assets, but have reasonable cash flow, can also file a Chapter 11. However, most times it is not in your best interests to file a Chapter 11. It is far better to try a Chapter 7 or Chapter 13 before you decide to take this route.

Why Should You File A Chapter 11 Bankruptcy

Denver Ch 11 Bankruptcy LawyerYou should file a Chapter 11 bankruptcy if:

  • You do not want to liquidate all your assets in a Chapter 7
  • You have too much debt to qualify for a Chapter 13

In a Chapter 7 bankruptcy, your house and vehicles can be put up for sale.  Items that can be protected under a Chapter 7 include clothing, household goods and jewelry. Proceeds go to creditors. You can only file a Chapter 13 if your bills do not exceed certain dollar amounts in secured debt and in unsecured debt (check with your attorney for the specific dollar amounts as they are subject to change).

You can continue operating your business after filing for a Chapter 11 bankruptcy. However, the court may decide to appoint a Trustee to take over the business if it finds sufficient cause such as incompetence, fraud or dishonesty.

When Do Chapter 11 Liquidations Happen?

Sometimes liquidation may be determined as a better option than reorganization in a Chapter 11 bankruptcy.  It is often a preferred option for distressed businesses when:

  • The time needed for a reorganization is too long or is not feasible
  • The business cannot continue operating while the bankruptcy process is continuing
  • The proposed repayment plan is opposed by creditors and or bankruptcy courts
  • The business does not have enough liquidity to cover the administrative costs of Chapter 11
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