Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is Chapter 11 Bankruptcy?”
The unveiling of the American Bankruptcy Institute’s proposed Chapter 11 bankruptcy reforms has been “long-awaited,” reports Katy Stech in the Wall Street Journal.
If you have been waiting for the Institute’s proposals, wait you will no more. It unveiled its recommended changes to Chapter 11 bankruptcies on Monday morning. Some of the proposals might someday become law.
The Institute’s proposed changes would streamline the Chapter 11 bankruptcy process for small businesses, or private companies with less than $10 million in assets or debts. The process would be cheaper as well, eliminating the automatic appointment of an unsecured creditors committee. The Institute also proposed to allow business owners to retain their ownership interest by repaying creditors based on their companies’ market value, as opposed to having to repay all their debts in full, as required under current rules.
Retailing businesses would be given additional time under the proposed changes to decide which store leases to continue and which ones to break. Current rules provide that tenants have 210 days after filing a bankruptcy petition to decide whether to assume or reject a lease. Stech reports that professionals who assist retailers in restructuring business operations have said the 210-day deadline leaves little time to renegotiate leases. Under the Institute’s plan, retailers would have one year to assume or reject leases.