If you run a business in Indianapolis and the debt has piled up, you are probably worried, maybe not sleeping, and missing meals. At Delancey Street we talk with owners like you every week. As business debt settlement specialists, we are not lawyers, and sometimes the honest answer is that a bankruptcy lawyer is the right call. If you decide that Chapter 11 of the Bankruptcy code is the best option for you, then you might have some questions about what you should be looking for in a good bankruptcy attorney in Indianapolis. Here are seven things we think every owner should know first.
The first is what Chapter 11 actually is. People call it “reorganization” bankruptcy, and reorganization means the company tries to stay open and figure out how to keep running. Chapter 11 basically means the owner stays in charge and tries to restructure and reorganize the company’s finances. It is not a liquidation. The company remains open and active during the proceeding. A trustee is appointed only when a case of fraud, dishonesty, or extreme incompetence is involved.
Second, be ready for it to take a while. Chapter 11 is not a quick and easy form of bankruptcy and no one telling you that it will be doesn’t know what they are talking about. Despite your fear and the pressure to do something right now, Chapter 11 can be a long process. Even so, it can often be the most advantageous form for a business that wants to stay open. While the company is operating during the proceedings, it can begin to engage in a reorganization of its debts. That gives it some breathing room to save the business.
Third, the plan is on you. In reality, it is up to the owner to make it happen. The owner must submit a workable plan for reorganizing the debt. A poor plan gives creditors the opportunity to propose their own. That is a big part of why the skill of the attorney you hire matters.
Fourth, the creditors and the judge both come into it. Any reorganization plan a business proposes has to be in the best interest of the creditors. The creditors are going to stick their oar in, one way or another. There is no way to get out of that. And then the plan has to be approved by the bankruptcy court judge. This is not a slam dunk, and it takes skill, judgment and savvy to know what you should and should not be proposing.
Hiring a Bankruptcy Lawyer
Fifth, hire a specialist. You start the process by hiring a bankruptcy lawyer who has handled many Chapter 11 cases, not a generalist who doesn’t know the particular mechanics of Chapter 11. The specialist will know more about how to proceed in a way that will actually work. In part, this is because the process requires the company to develop a plan of reorganization, and the specialist has a better sense of what might be workable. This is a complex process and not something you just wing on your own.
Sixth, get your paperwork together before you sit down with anyone. Chapter 11 is complicated and being prepared helps. Whatever legal counsel you use, you should be prepared before you talk with them. You should have all the information they ask for. Be ready with the balance sheet, income statement, cash flow statement, accounts payable and receivable, outstanding debt obligations, list of assets, vendor/supplier contracts, and other day-to-day business agreements. You are not just submitting a list of what you owe; you are submitting a plan of how you will pay the debts. Everything is based on numbers.
Seventh, understand how the case actually starts. A Chapter 11 case begins when the attorney files a petition with the bankruptcy court, and it can be voluntary (by you) or involuntary (by qualifying creditors). Voluntary is preferable to retain control. It is always better to file before your creditors do. Unless the court orders otherwise, a Chapter 11 debtor also files a schedule of assets and liabilities, a schedule of current income and expenses, a schedule of executory contracts and unexpired leases, and a statement of financial affairs. Most filers are businesses (corporations, partnerships, LLCs); individuals or married couples can file in rare cases, and they have more paperwork to file.
Then there are the court fees. Filing starts with a $1,167 case filing fee plus a $550 administrative fee, paid to the clerk when you file. You can request to pay them in installments, but you must make the final payment no later than 120 days after filing. If you are experiencing financial hardship, the court can extend the deadline to 180 days.
Where does that leave you? It is a time-consuming process as well, and in some ways a stressful one, but it can help save your company. A lot of business owners don’t want bankruptcy, and others aren’t sure if they need it. That is where we come in. Delancey Street is a business debt settlement company, not a law firm. We don’t pretend to be lawyers, and we don’t provide legal advice. We negotiate with merchant cash advance funders, lenders and other business creditors for less than the full balance owed. The first consultation is free and confidential. If a cheaper option exists, we say so on that first call, and when bankruptcy is the better path we refer you to a vetted independent attorney. But as we said, if we think a bankruptcy lawyer is the best fit for you, we want you to be well informed.
