Woodland Hills Chapter 11 Bankruptcy Attorney
Reorganization Bankruptcy for Business Debtors
For businesses facing financial strain, including constraints arising from transitory downturns, Chapter 11 bankruptcy offers a way to remain in operation long enough to regroup and reformulate a future plan. It also positions debtors as fiduciaries with important responsibilities that can impact the efficiency, costs, and ultimate outcome of a case.
At Havkin and Shrago, our Woodland Hills attorneys have decades of experience helping businesses navigate Chapter 11 bankruptcy, Subchapter V filings, adversary proceedings, and related matters. We’re known for taking on tough cases and have the resources to advocate for debtors with considerable assets, creditor / vendor disputes, and other complex circumstances.
Speak with a Chapter 11 reorganization attorney during a FREE consultation. Havkin and Shrago proudly works with corporations, partnerships, and sole proprietorships across Southern California.
Key Components of Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a “reorganization” bankruptcy primarily used by businesses to retain assets and remain in operation while restructuring debt. If your business is struggling to pay vendors, meet payroll, or cover other obligations, debt relief provided by Chapter 11 can get things back on track.
Key elements of a Chapter 11 case include:
- Automatic stay. Like other bankruptcies, Chapter 11 provides for an automatic stay that bars most creditors from pursuing collection activities, creating needed elbow room to right the ship.
- Retaining ownership and assets. Businesses in Chapter 11 bankruptcy function as “debtors-in-possession,” and continue to control the business and its assets without a trustee. Debtors in other cases, including small businesses that file under Subchapter V, are subject to greater oversight.
- Payment plan and debt relief. Chapter 11 centers on the creation of a financial plan that’s agreed upon by the debtor, creditors, and court. Plans can be tailored to the business and its terms negotiated with various lenders.
Chapter 11 can be a workable debt relief solution for businesses that wish to retain assets and remain in business while restructuring debt. Sometimes, it is the only option.
At Havkin and Shrago, we leverage the insight of Partners Stella Havkin, a Dual-Certified Bankruptcy Specialist, and Ian Shrago, a trusted debtors’ attorney with extensive experience counseling businesses, to advise clients facing bankruptcy and business concerns. As trial lawyers who actively prosecute and defend against claims, we also have the means to help debtors litigate disputes.
Subchapter V was added to Chapter 11 of the U.S. Bankruptcy Code in 2020 to make reorganization bankruptcies more accessible to small businesses. It streamlines the reorganization process, helps control costs, and gives small business struggling to cover obligations while still earning a profit a simplified way to pay down debt without having to liquidate.
Some key benefits of Subchapter 5 bankruptcy include:
- Staying in business. You can continue to own and operate your business while paying unsecured creditors throughout the duration of your payment plan.
- No creditor-provided plans. Subchapter V filers can compel creditors to accept court-approved payment plans of 3-5 years that allow them to shed unsecured debt. These plans can only be submitted by your business and not by a creditor.
- No disclosure statements. Chapter 11 cases generally require debtors to file detailed disclosures about their business and its ability to repay creditors, whereas Subchapter V cases do not.
- Installments for expenses. Subchapter V allows you to spread administrative expenses over the life of a plan, rather than paying them on the day the plan goes into effect.
- Trustee oversight. Subchapter V trustees are appointed in every Subchapter V case, but they function more as mediators who help facilitate the development of a reorganization plan.
Small businesses must meet qualifying criteria to file bankruptcy under Subchapter V, namely requirements that a business:
- Be engaged in commercial or business activities; and
- Have debt that does not exceed the debt limit.
Many things have changed in the short time since Subchapter V was created. In addition to evolving case law that defines what it means to be engaged in “commercial or business activities,” there have also been changes to the maximum debt cutoff for eligibility.
Prior to COVID, the Small Business Reorganization Act (which created Subchapter V) imposed a $2.7 million debt limit. That was increased to $7.5 million for eligible businesses under the CARES Act (2020) and extended an additional two years under the Bankruptcy Threshold Adjustment and Technical Corrections Act, which went into effect in June of 2022.
Given the evolving legal landscape, our team can evaluate your Subchapter V eligibility and help you identify the most appropriate course of action for your case.
Call for a FREE Consultation: (818) 600-6240
Havkin and Shrago is trusted across Southern California because we have the experience that complex cases demand. From guiding businesses through Chapter 11 and Subchapter V proceedings to litigating issues of dischargeability, preferential transfers, and more, we offer comprehensive counsel.
"Stella is a consummate professional and really goes the extra mile to make sure that you understand the process in great detail."- Todd
"In a situation where you simply can't afford another mistake. Stella is the one you want behind you."- Anonymous
Our team has a long history of satisfied clients because we deliver solutions.
Bankruptcy LitigationWe have over 30 years of experience in bankruptcy and business law.
Creative ResolutionNo matter the complexity of your problem, we are able to find a creative solution.