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Chapter 11 Modern Solutions for Complex Legal Matters

Chapter 11 Bankruptcy Attorneys in Santa Clarita

Attorneys Serving Santa Clarita

Chapter 11 is a reorganization of debt. All types of business entities - corporations, LLCs, partnerships, and business trusts - as well as individuals are eligible for Chapter 11, and there are no asset, debt, or income limitations. However, Chapter 11 is labor-intensive and therefore expensive.

Most individuals can use Chapter 13 instead, and businesses contemplating Chapter 11 should make a realistic assessment of their inherent profitability before filing Chapter 11. Moreover, negotiations with major creditors, with Chapter 11 as the explicit alternative, can often yield a positive outcome, eliminating the need for filing under Chapter 11 or allowing the formulation of a "pre-packaged" plan that key creditors will support.

What is Chapter 11?

The beginning of a Chapter 11 case - which we call the "launch phase" - always involves the assembly of significant business data and its submission to the Court and to the United States Trustee. Sometimes, emergency motions to be authorized to use "cash collateral" or to pay key suppliers or employees must be filed immediately after the case is commenced.

Throughout the Chapter 11 case, the debtor is required to file monthly reports detailing its business activity, accounting on both a cash (every penny in, every penny out) and accrual basis, and summarizing significant business and legal developments.

In Chapter 11, a repayment plan is proposed - usually by the debtor, but sometimes by a creditor or group of creditors. The plan must be accompanied by a disclosure statement that provides creditors with certain required information and specifies the classes by which creditors and shareholders will vote on the plan. Once the disclosure statement is approved by the Court, it is served on all creditors and shareholders, along with the plan itself and a ballot.

Benefits of Chapter 11

Chapter 11 plans can incorporate many features: the term and interest rate on secured debt can be modified; payments can be made from future operating profits, new financing, or sales of capital assets; pre-bankruptcy leases and contracts can be assumed (maintained) or rejected (cancelled); monies paid to some unsecured creditors over the last year, and property transferred within four years, can sometimes be recovered; and creditors can be compelled to accept payments of far less than 100%, or even to receive equity interests, in cancellation of their debt.

In the last 5 years, Young & Chic LLP has confirmed Chapter 11 plans for businesses in which the total payments to unsecured creditors ranged from 13% to 40%, made in installments over 2 to 5 years. Designing and confirming a Chapter 11 plan is a complex process, which requires that the interests of many competing stakeholders are addressed.

A class of creditors which approves the plan by a majority vote representing 2/3 of the dollar amount owed to that class is deemed a "consenting class." If all classes are consenting classes, the plan is confirmed upon proof of the required vote. If not all classes consent, a contested evidentiary hearing (often called a "cram-down") is held to determine if the plan is "fair and equitable"; cram-downs can be complex multi-day trials, including financial and industry-specific expert testimony.

Once a Chapter 11 plan is confirmed and payments begin, the debtor can seek entry of a final decree. Entry of this decree marks the successful completion of the case - subject to the case being re-opened if there is a default in plan payments.

Who should consider Chapter 11?

Chapter 11 can be effectively used by:

  • A business that has too much debt due in the short term to survive, but which is inherently profitable if the debt is restructured
  • A business that needs a "breathing spell" to realize additional income from a new source or conduct a controlled partial liquidation while remaining in operation
  • An individual who is in jeopardy of losing a house or other property, or having assets seized due to judgment levies or garnishments, but who does not qualify for Chapter 13 due to the debt limitations or regular income requirements applicable to Chapter 13.

Call Young & Chic LLP to consult with an experienced Santa Clarita bankruptcy attorney regarding whether Chapter 11 is the right option for you and/or your business.

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    We are very blessed to have business with Mr. Young and staff. They have us well taken care of. It was our first time filing for bankruptcy and we were very nervous about it. They made us feel at ease and educated us with the process. Our case went smoothly because of them. We really appreciate their time and effort to help us and we definitely recommend them to everybody.
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    I'm very pleased with the legal services provided by the Young & Chic LLP law firm. I became the trustee of my sister's trust upon her passing and needed help with administration, both legal and financial. She was located in Santa Clarita, and I'm located in Minnesota. With the great help of the staff, we were able to address all concerns from beneficiaries and myself to bring the administration to a close with minimal drama. Even with the distance between Young & Chic LLP and me, all went smoothly. If you need help with a trust, I would definitely recommend the services of Young & Chic LLP.

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    You don't have to be Superman to fight for truth, justice and the American Way. The team at Young & Chic LLP are doing this every day and although their calm and professional Clark Kent demeanor might not show it, they are true super heroes in my book. Rarely do you call on the services of a law firm when life's all rainbows and unicorns. In fact, most of us call on these heroes when we are stressed, angry, depressed or perhaps even defeated. It is during these times of crisis that we need support, patience, understanding and compassion to light the way through the darkness. Young & Chic LLP provided us with this kind of hope and guided us through a very challenging real estate matter with the utmost professionalism and a broad and deep understanding of the legal issues at hand. There is a depth to this team that rivals any Sports Dynasty of the last century, including the infamous 1980's Los Angeles Lakers or the New England Patriots. Faster than a speeding legal brief, more powerful than a writ of execution, able to leap tall depositions in a single motion! Young & Chic LLP are the only team I would want representing me and you'd be wise to make the same choice.
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    My family uses the law offices of Young & Chic LLP of Valencia, California, for some of the most critical preparations for our future and security in areas of estate planning. The unique circumstances of our situation were carefully examined and Mark Young along with his team of attorneys gave us options and advice in areas that will serve our future in intelligent and proactive ways. We feel protected, prepared and peaceful about everything this firm manages for us. We appreciate the compassion and competency held by every member of this firm and recommend the law offices of Young & Chic LLP to our friends and family throughout Los Angeles and all of California.
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    Very good law services, great staff, they were all very respectful to me and treated me well, especially Shelly M. I have never work with such a sweet and professional person. The office is nice with amazing conference room. I was in a situation that no one could seem to help me with and they figured it out. This law firm is amazing. I received responses to my questions almost immediately every time. The pricing can be a little steep, but it's worth it and they do not pressure you about payment up front, they also give you an opportunity to make payment arrangements. I will be using this firm again soon for family estate planning. I strongly recommend Young & Chic LLP.
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    I have no words to express the excellent work done by the lawyers at Young & Chic LLP; thanks to their experience and professionalism, I achieved an excellent job in selling my client's probate. After many law firms rejected my client's case because of the combination of "probate plus a Short Sale," it was not money for the case! Young & Chic LLP offered to help us and did an excellent job. Thank you for your excellent representation. You always will be on my list as the #1 Law Firm for ANY REAL ESTATE ISSUE. Thanks, Young & Chic LLP.
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