Business Bankruptcy – Simplified Operating Guidelines
A "How-To" Manual
For Non-Bankruptcy Professionals
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Robert S. Apfelberg, Karrie L. Bercik, Esq., Page 2
These materials provide simple operating guidelines for businesspersons contemplating filing a debtor-in-possession, corporate, business bankruptcy ("chapter 11"). (In this type of bankruptcy case the company’s present management and board continue to operate the company.) They are also intended to be an introduction to the strengths and formalities of a business bankruptcy for non-bankruptcy attorneys, creditors, and businesspersons. The specific duties, powers and complications of each chapter 11 case are individually determined. Partnership, limited liability corporation and personal bankruptcy issue differences are not specifically discussed.
Filing a business bankruptcy is complicated by the cost, unexpected financial and legal powers and complex controls of the bankruptcy court ("court"). Among these complications is that the fees and costs incurred by all of the interested parties is borne by the business in bankruptcy ("debtor-in-possession" or "debtor"). Additional issues include the negative response of customers, trade suppliers and family members. Effectively functioning during a chapter 11 requires: (i) special management skills, (ii) constant contact with both business and bankruptcy attorneys, and (iii) personality traits, including, but not limited to, optimism, a strong will and a sense of humor.
In order to be eligible to file a business bankruptcy the debtor’s debts exceed its assets and it cannot make current payments on its debts. If you, or one of your clients satisfy this "equity insolvency test" this article may prove helpful.