Chapter 11定义:
Chapter 11 bankruptcy is a form of corporate financial reorganization in which a company's assets gets sold off to remunerate past due creditors. In some cases, Chapter 11 bankruptcy allows companies to continue to function. The theory here is that businesses which are allowed to move forward will generate revenue, protect jobs, and otherwise heal creditor wounds. Scraping and selling businesses for their parts, on the other hand, may lead to less than optimal utilization of company resources. Chapter 11 bankruptcy filings may be “strategic”. In other words, management may wish to reorganize for political reasons, not simply for the sake of balancing books.
A reorganization proceeding in which the debtor may continue in business or in possession of its property as a fiduciary. A confirmed Chapter 11 plan provides for the manner in which the claims of creditors will be paid in whole or in part by the debtor.
Of the companies that file for Chapter 11 bankruptcy, only 1 in 10 survives the procedure. And the one lucky company only survives because it has a ton of cash when it files.
(As you may know, Chapter 11 is a form of bankruptcy that lets your company continue to run with protection from your creditors, but with the oversight of a bankruptcy judge. Chapter 7 bankruptcy on the other hand is a liquidation of your company. You can get a detailed description of these and other legal alternatives in the "Fix Your Failing Company Toolkit.")
Now, as you might guess, most failing companies don’t have much cash when they file for Chapter 11. So why do their bankruptcy attorneys encourage them to file Chapter 11? The bankruptcy attorneys make a fortune on the deal, that’s why!
How much will your attorney make? Typically a Chapter 11 filing is going to cost you at least $50,000 in attorney fees for the smallest company and over $100,000 is common. Your bankruptcy could make your attorney’s year and buy him or her a new luxury car..
Let me show you how outrageous these fees can be. In a recent bankruptcy filing, a $20 million technology firm took Chapter 11 and it had over a $1 million in fees before it was over. Fortunately, it had $3 million in the bank before the filing… so the company survived.
Here’s what typically happens to most cash-poor companies filing a Chapter 11 bankruptcy. The CEO or business owner becomes tired of fighting the creditors everyday. He or she thinks that Chapter 11 will make their debts go away (it will) and save their business (it won’t.) The business leader goes down to the bankruptcy attorney’s office, and the attorney, with a gleam in his eyes, wholeheartedly recommends filing Chapter 11.
(By the way, if the attorney gives you non-bankruptcy alternatives to Chapter 11, you will know that your attorney is looking out for your best interests... but these individuals are often hard to find.)
Then, within the next few months, the company runs out of cash completely because of paying the high legal fees. Since there’s no cash remaining, the creditors’ attorney (which the bankrupt company is also paying for) files a motion to convert the Chapter 11 into a Chapter 7 liquidation bankruptcy. Without cash in the bank, the judge has no choice, but to order a liquidation of the company.
Game over for your business. But that’s not all…
Do you have personal guarantees on debts that your bankrupt company can’t pay? Will angry creditors and investors sue you anyway? The hits just keep coming for you, but your bankruptcy attorney had a great year.
So the moral of this story is: Chapter 11 is seldom is the best choice for your company.
Obviously, the solution is to fix your failing company, sell it or use little-known, inexpensive legal maneuvers. These are much better choices than Chapter 11 and you’ll find out more about them later in this article.
那么这次曼能不能从破产保护中生存下来，请看David Skeel, a bankruptcy law historian at the University of Pennsylvania的说：
"It's a weird case because ordinarily you think of bankruptcy as giving you breathing space — it's not clear it will here,They've used up a lot of their lives already. They desperately tried to find a solution. They've tumbled into bankruptcy kind of having run out of near-term options. This is a company that is in free-fall."
小知识：Bankruptcy Terminology
| /> Bankruptcy has its own language. Here is a brief definition of those terms used in this site and in the Bankruptcy Code. Adversary proceeding: A lawsuit filed in the bankruptcy court which is related to the debtor's bankruptcy case. Examples are complaints to determine the dischargeability of a debt and complaints to determine the extent and validity of liens. Automatic stay: The injunction issued automatically upon the filing of a bankruptcy case which prohibits collection actions against the debtor, the debtor's property or the property of the estate. Avoidance: The Bankruptcy Code permits the debtor to eliminate (avoid) some kinds of liens that interfere with (or impair) an exemption claimed in the bankruptcy. Most judgment liens that have attached to the debtor's home can be avoided if the total of the liens (mortgages, judgment liens and statutory liens) is greater than the value of the property in which the exemption is claimed. This is sometimes called "lien stripping." Avoidance powers: Rights given to the bankruptcy trustee or the debtor in possession to recover certain transfers of property such as preferences or fraudulent transfers or to void liens created before the commencement of a bankruptcy case. Bankruptcy Code. Title 11 of the United States Code governs bankruptcy proceedings. Bankruptcy is a matter of federal law and is, with the exception of exemptions, the same in every state. When federal bankruptcy law conflicts with state law, federal law controls. Bankruptcy estate:/> The estate is all of the legal and equitable interests of the debtor as of the commencement of the case. From the estate, an individual debtor can claim certain property exempt; the balance of the estate is liquidated in a Chapter 7 to pay the administrative costs of the proceeding and the claims of creditors according to their priority. Chapter 7: The most common form of bankruptcy, a Chapter 7 case is a liquidation proceeding, available to individuals, married couples, partnerships and corporations. Chapter 11: A reorganization proceeding in which the debtor may continue in business or in possession of its property as a fiduciary. A confirmed Chapter 11 plan provides for the manner in which the claims of creditors will be paid in whole or in part by the debtor. Chapter 12: A simplified reorganization plan for family farmers whose debts fall within certain limits. Chapter 12 was not renewed when it expired this session of Congress. Chapter 13: A repayment plan for individuals with debts falling below statutory levels which provides for repayment of some or all of the debts out of future income over 3 to 5 years. Collateral: The property which is subject to a lien. A creditor with rights in collateral is a secured creditor and has additional protections in the Bankruptcy Code for the claim secured by collateral. The measure of the secured claim is the value of the collateral available to secure the claim: it is possible to have a lien on property that is subject to a senior lien or liens such that the security available to pay the claim is really without value to the junior creditor. The general rule with respect to liens is "First in time, first in right." Confirmation: The court order which makes the terms of the plan for repayment of debts in a Chapter 11, 12 or 13 binding. The terms of the confirmed plan replace the prepetition rights of the debtor and creditor. Conversion: Cases under the Code may be converted from one chapter to another chapter; for example, a Chapter 7 case may be converted to a case under Chapter 13 if the debtor is eligible for Chapter 13. Even though the chapter of the Code which governs it changes, it remains the same case as originally filed. Creditor: The person or organization to whom the debtor owes money or has some other form of legal obligation. Debtor: The debtor is the entity ( person, partnership or corporation) who is liable for debts, and who is the subject of a bankruptcy case. Debtor in Possession: In a Chapter 11 case, the debtor usually remains in possession of its assets and assumes the duties of a trustee. The debtor in possession is a fiduciary for the creditors of the estate, and owes them the highest duty of care and loyalty. one who is entrusted with duties on behalf of another. The law requires the highest level of good faith, loyalty and diligence of a fiduciary, higher than the common duty of care that we all owe one another. The debtor in possession in a Chapter 11 is a fiduciary for the creditors, owing loyalty to the creditors and not the shareholders of the debtor. Denial of discharge: Penalty for debtor misconduct with respect to the bankruptcy case or creditors as a whole. The grounds on which the debtor's discharge may be denied are found in 11 U.S.C. 727. When the debtor's discharge is denied, the debts that could have been discharged in that case cannot be discharged in any subsequent bankruptcy. The administration of the case, the liquidation of assets and the recovery of avoidable transfers, continues for the benefit of creditors. Discharge: The legal elimination of debt through a bankruptcy case. When a debt is discharged, it is no longer legally enforceable against the debtor, though any lien which secures the debt may survive the bankruptcy case. Dischargeable: Debts that can be eliminated in bankruptcy. Certain debts are not dischargeable; that it, they may not be discharged through bankruptcy or may only be discharged through Chapter 13. Family support and criminal restitution are examples of debts which cannot be discharged. Debts incurred by fraud can only be discharged in Chapter 13. Dismissal: The termination of the case without either the entry of a discharge or a denial of discharge; after a case is dismissed, the debtor and the creditors have the same rights as they had before the bankruptcy case was commenced. Exempt: Property that is exempt is removed from the bankruptcy estate and is not available to pay the claims of creditors. The debtor selects the property to be exempted from the statutory lists of exemptions available under the law of his state. The debtor gets to keep exempt property for use in making a fresh start after bankruptcy. Exemptions: Exemptions are the lists of the kinds and values of property that is legally beyond the reach of creditors or the bankruptcy trustee. What property may be exempted is determined by state and federal statutes, and varies from state to state. Fiduciary: General, unsecured claim: Creditor's claim without a priority for payment for which the creditor holds no security (or collateral). If the available funds in the estate extend to payment of unsecured claims, the claims are paid in proportion to the size of the claim relative to the total of claims in the class of unsecured claims. Lien: An interest in real or personal property which secures a debt; the lien may be voluntary, such as a mortgage in real property, or involuntary, such as a judgment lien or tax lien. Liquidated: A debt that is for a known number of dollars is liquidated. An unliquidated debt is one where the debtor has liability, but the exact monetary measure of that liability is unknown. Tort claims are usually unliquidated until a trial fixes the amount of the liability of the tort feasor. Non dischargeable: A debt that cannot be eliminated in bankruptcy. Non dischargeable debts remain legally enforceable despite the bankruptcy discharge. Perfection: When a secured creditor has taken the required steps to perfect his lien, the lien is senior to any liens that arise after perfection. A mortgage is perfected by recording it with the county recorder; a lien in personal property is perfected by filing a financing statement with the secretary of state. An unperfected lien is valid between the debtor and the secured creditor, but may be behind liens created later in time, but perfected earlier than the lien in question. An unperfected lien can be avoided by the trustee. Personal property: Property that is not real property or affixed to real property, such as cars, stock, furniture, etc. Petition: The document that initiates a bankruptcy case. The filing of the petition constitutes an order for relief and institutes the automatic stay. Events are frequently described as "prepetition", happening before the bankruptcy petition was filed, and "post petition", after the bankruptcy. Preference: A transfer to a creditor in payment of an existing debt made within certain time periods before the commencement of the case. Preferences may be recovered by the trustee for the benefit of all creditors of the estate. Pre-petition: Claims or events arising before the commencement of the bankruptcy case, that is, before the filing of the bankruptcy petition. Generally only pre petition debts may be discharged in a bankruptcy proceeding. Priority: The Bankruptcy Code establishes the order in which claims are paid from the bankruptcy estate. All claims in a higher priority must be paid in full before claims with a lower priority receive anything. All claims with the same priority share pro rata. Claims are paid in this order: 1) costs of administration 2) priority claims and 3) general unsecured claims. Secured claims are paid from the proceeds of liquidating the collateral which secured the claim. Priority claims: Certain debts, such as unpaid wages, spousal or child support, and taxes are elevated in the payment hierarchy under the Code. Priority claims must be paid in full before general unsecured claims are paid. Proof of claim: The form filed with the court establishing the creditor's claim against the debtor. Property of the estate: The property that is not exempt and belongs to the bankruptcy estate. Property of the estate is usually sold by the trustee and the claims of creditors paid from the proceeds. Reaffirm: The debtor can chose to reaffirm debts that would otherwise be discharged by the bankruptcy. Generally, when a debt is reaffirmed, the parties to the reaffirmed debt have the same rights and liabilities that each had prior to the bankruptcy filing: the debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn't pay. Relief from stay: A creditor can ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate. If the motion is granted, the moving party (but no one else) is free to take whatever action the court permits. Relief can be absolute, for example, permitting the creditor to foreclose on property, or limited, as for example, allowing the recordation of a notice of default. Schedules: The debtor must file the required lists of assets and liabilities to commence a bankruptcy case, collectively called the schedules. Secured debt: A claim secured by a lien in the debtor's property by reason of the debtor's agreement or an involuntary lien such as a judgment or tax lien. The creditor's claim may be divided into a secured claim, to the extent of the value of the collateral, and an unsecured claim equal to the remainder of the total debt. Generally a secured claim must be perfected under applicable state law to be treated as a secured claim in the bankruptcy. Trustee: the court appoints a trustee in every Chapter 7 and Chapter 13 case to review the debtor's schedules and represent the interests of the creditors in the bankruptcy case. The role of the trustee is different under the different chapters. Unsecured: A claim or debt is unsecured if there is no collateral that is security for the debt. Most consumer debts are unsecured |
