Arizona Chapter 11 Bankruptcy

What is Chapter 11 Bankruptcy?

Chapter 11 Bankruptcy is primarily utilized by businesses looking to reorganize.  While Chapter 7 is available to businesses, many businesses find that liquidation is disadvantageous.  In some regards, Chapter 11 is similar to Chapter 13 in that debt is restructured and a new repayment plan is created.  Chapter 11 also shares some characteristics with Chapter 7 because certain assets may be forfeited to repay creditors.  Under Chapter 11, businesses are permitted to continue operating after they have filed for bankruptcy.

Where Chapter 11 gets complicated is in determining which assets are exempt from forfeiture.  Depending on the business entity in question, assets can be treated differently.  Stockholders do not risk forfeiting their assets when a corporation files for Chapter 11.  Partners in partnerships may be required to forfeit personal assets or file for personal bankruptcy to protect their assets.  Sole proprietors may have to forfeit their personal assets to repay their business debts.  Asset exemptions become even more complicated when dealing with international businesses or when parent companies are involved.

Chapter 11 Bankruptcy can also be utilized by individuals who have secured debts that exceed $1,010,650, and/or unsecured debts that exceed $336,900.