California Chapter 11 Bankruptcy Law

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California businesses have a couple of options to deal with dire financial conditions, and filing for a Chapter 11 bankruptcy can be an attractive option. However, it can be a bit complex, and to be successful, the business should consult experienced legal counsel to prepare the necessary filings.

1. Definition

   • Chapter 11 in the federal Bankruptcy Code is specific to business and allows for a reorganization of debt and liabilities owed to creditors. Businesses most commonly affected by Chapter 11 include corporations, sole proprietorships, partnerships and other types of companies.

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How Creditors Get Paid Under a Chapter 11 Plan

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• Obviously, the debtor doesn’t have sufficient ready funds to pay all creditors at the time of filing. Instead, an approved plan relies on future business earnings and profits to address creditor debts. The debt claims are prioritized with taxes owed being paid first. Secured claims will come next and unsecured debts follow third with partial payments.

Read more: California Chapter 11 Bankruptcy Law | eHow.com http://www.ehow.com/about_7228163_california-chapter-11-bankruptcy-law.html#ixzz1gjFQ5400

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