Chapter 11 is a business bankruptcy proceeding that enables a business to continue operating despite a present inability to the meet its obligations to creditors. Under a successfully confirmed plan of reorganization, a business can greatly reduce debts, restructure tax obligations and gain significantly more time and flexibility with secured creditors and lessors. Individuals may also utilize Chapter 11 for individuals when Chapter 7 and Chapter 13 do not provide appropriate relief. Scroll below for examples of Chapter 11 success stories handled by Wartchow Law Office.

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Read more detailed content on chapter 11 issues and procedure on Wartchow Law’s Chapter 11 blog.

 

Common issues addressed in Chapter 11:

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• Cash flow problems

• Inability to meet payroll and other operating expenses

• Withholding and sales tax liabilities

• Tax levies and other tax collection efforts

• Unsecured debt

• Secured creditor issues

• Lack of working capital or reserve funds

• Commercial Lease Defaults / Rental Arrears

• Eviction proceedings

• High interest rates / Unmanageable payments

• Failed negotiations with landlord, banks or secured lenders

• Impractical terms for equipment financing

• Threats of repossession or eviction

• Pending liquor license posting and similar administrative actions

• Pending lawsuits or judgments

 

When a business is facing imminent cash problems or adverse action by a landlord or creditor, time is of the essence to properly assess all issues implicated in a Chapter 11 business bankruptcy. While a hurried Chapter 11 filing should be avoided whenever possible, it’s best to consult a Chapter 11 attorney prior to any impending deadlines or adverse actions. Filing of the bankruptcy petition invokes an immediate and automatic stay of all pending lawsuits, collection and levies, repossession, eviction and other administrative and legal actions against the business. A successful Chapter 11 typically is the result of negotiations with key creditors, adherence to the procedural requirements of the Bankruptcy Code, and confirmation a plan of reorganization that contemplates the long-term viability of the reorganized business. A Chapter 11 can reorganize business obligations in any number of ways, including restructuring pre petition taxes for payment over five years, extending secured creditor claims over time while reducing interest rates, and discharging a large portion of unsecured debt. Chapter 11 Case Studies and Successes

 

Successful Chapter 11 proceedings and plans of reorganization include:

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• Reorganized Minneapolis medical transportation provider in 10-month contested proceeding from file date to successful confirmation, including restructure of $100,000 in secured and priority state and federal tax claims, and $100,000 in general unsecured debts.

• Reorganized Minneapolis video and film production company, successfully discharging over $375,000 in general unsecured debt in a 9-month Chapter 11 proceeding.

• Prominent restaurant and bar in Uptown Minneapolis reorganized. Negotiated release of over $1.7MM in alleged sales tax owing from indirect “mark-up” bar audit, reduced secured creditor claim by 60%, and discharged over $1.75MM in general unsecured claims.

• Premier downtown Minneapolis sushi and steakhouse restaurant and lounge. Chapter 11 plan of reorganization confirmed, discharging $1MM in unsecured debt, reducing secured debt by over $460,000 and restructuring significant tax obligations over five years.

• Downtown Minneapolis nightclub Chapter 11 plan of reorganization confirmed, precluding continuation of ongoing employment litigation.

• Chapter 11 filed for classic live music venue and restaurant located in downtown Austin, Texas.

• Defeated Bank of America in evidentiary trial in Bankruptcy Court, securing for the debtor a 10-year commercial lease option over objection of landlord in Chapter 11 proceeding.

• Defeated change of venue motion brought by Bank of America seeking to transfer Chapter 11 proceeding from Minnesota to Texas, thereby securing preferential venue in Minnesota.

• Special counsel on Chapter 11 plan confirmed for orthopedic surgery center and medical clinic located in southern Minnesota. 

 

Located in Edina, Minnesota, Wartchow Law Office provides initial Chapter 11 consultations to review the business
 liabilities and other circumstances affecting a possible Chapter 11 bankruptcy proceeding and to advise on Chapter 11 reorganization and non-bankruptcy options to keep a business operating and improve future prospects.