Question 1

What is Chapter 11 bankruptcy and who files it?

Accepted Answer

Chapter 11 is a reorganization bankruptcy used mainly by businesses that want to keep operating while restructuring their debts. The debtor usually remains in possession of its assets and continues running the company under court supervision while negotiating a repayment plan with creditors. Individuals whose debts exceed the Chapter 13 limits can also file under Chapter 11.

Question 2

How is Chapter 11 different from Chapter 7 or Chapter 13?

Accepted Answer

Chapter 7 liquidates assets to pay creditors and typically ends a business, while Chapter 13 is a streamlined repayment plan available only to individuals within set debt limits. Chapter 11 lets a company or a high-debt individual keep operating and propose a reorganization plan that creditors vote on and the court confirms. It is more flexible, but also more complex and more expensive.

Question 3

Can a small business in Puerto Rico use Chapter 11?

Accepted Answer

Yes. Subchapter V of Chapter 11 gives qualifying small businesses a faster, less expensive reorganization track: no creditors' committee in most cases, no competing plans, and a trustee who helps facilitate a consensual plan. A lawyer can evaluate whether your business meets the debt limits and eligibility requirements for Subchapter V.

Bankruptcy (Chapter 11) Lawyers in Puerto Rico

Frequently Asked Questions — Bankruptcy (Chapter 11)

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