Filing Chapter 11 bankruptcy follows the same initial procedures as filing bankruptcy under other chapters. The process starts with general filings of the bankruptcy petition, statement of financial affairs, and supporting schedules. These are essentially the same forms that are required in consumer bankruptcy cases, except that the questions are answered in a different manner because the petitioner (debtor) is an operating business.
Chapter 11 bankruptcy is different from consumer bankruptcy petition in that it requires immediate supplemental filings of "first day motions." An operating business must acquire court approval to continue its operations immediately upon filing Chapter 11 bankruptcy. For instance, approval is immediately required to authorize wage payments accrued prior to filing. These kinds of payments are needed so employees of the business going bankrupt are not forced to resign and find another employment. First day motions are also issued so that the business can continue to pay vendors, suppliers, and other people, parties, and entities that the business uses.
A package regarding the standard operating guidelines is sent to Chapter 11 debtors from the US Trustee's office. Should a creditor have a lien on the filer's or debtor's cash in the banks, the ruling court would authorize the debtor to use this cash for the business' operations.
Find a qualified bankruptcy attorney to draft your first day motions prior to filing. This way, documents can immediately be submitted and filed after the bankruptcy petition. The court is going to hear these first day motions on an emergency basis, then issue appropriate orders so the business may survive. During the hearing, the court will also issue orders to determine whether the debtor's filing is in compliance while setting forth standards and guidelines that the court expects the debtor's operation to follow.
First day motions are heard on an emergency basis, rather than the first day after filing. This is often within the first week of the petition. A notice is also given to the creditors, where the petitioner has their contact information. As a practicality, some first day motions are heard before, some creditors give notice.
First day orders also include an application by the bankruptcy lawyer to be retained by the petitioner, authorizing the debtor to pay him/her up to 70% of the up-to-date billing, provided that the billings may be examined by the court later.
About The Author:
The Law Offices of Justin McMurray, P.A has the ability to effectively handle nearly every bankruptcy & foreclosure case. The Law Offices of Justin McMurray, P.A. reviews your case and help you to decide whether this is the best option for you or not. The firm guides you throughout the process to ensure you get the most out of this opportunity to make a fresh start in life.
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