Texas Ch 11 Bankruptcy Cost
Businesses encounter financial troubles all the time. For example, General Motors had to file for a Chapter 11 bankruptcy on June 1, 2009 and many other businesses followed suit after that. After experiencing tax problems, cash flow delays, downturns and more, most business file for bankruptcy to survive.
Filing for a Chapter 11 helps them reorganize their finances and repay their debts in a more manageable way. Under Federal Bankruptcy Laws, a business can get some relief by either reorganizing or liquidating under the Bankruptcy code. Businesses can either file a Chapter 7 or Chapter 11 bankruptcy to get some relief from their debt.
Chapter 11 Business bankruptcy
A Chapter 11 bankruptcy is often used by businesses to reduce or eliminate unsecured debts such as credit cards and lines of credit. They can use a Chapter 11 bankruptcy to reorganize their debts, reject contracts, get rid of leases, and deal with lawsuits so that they can stay in business. If they do not want to remain in business, they may chose to repay debts overtime.
A Chapter 11 bankruptcy offers businesses the best option of remaining in operation but it can be a time consuming and complex process. Under a Chapter 11 bankruptcy, attorney fees are billed per hour against a retainer and attorney fees have to be approved as reasonable or necessary by a court. The business filing for bankruptcy also has to pay a Bankruptcy court filing fee of about $1000.
But the fact that each case is different and the fact that a case may take months or years, makes it difficult to quote an exact cost for filing a Chapter 11 bankruptcy. Different cases have different retainer requirements.
Generally, a petition to file a Chapter 11 bankruptcy begins with a voluntary petition form sourced in legal stationery stores or online. The debtor then fills in the business name, place of operation and other required details. Immediately after filing you get to control your assets while you still owe money. The petition stops all listed creditors from trying to collect money your business owes.
The creditors are often notified by the court of the filing. After that, they must stop all garnishment actions, all lawsuits and telephone calls against the debtor. The types of businesses that may seek to file a Chapter 11 include:
- Real estate investors
- Construction companies
Single asset real estate debtors that are facing foreclosure can also benefit from filing a Chapter 11. They include:
- Apartment complexes
- Shopping centers
- Strip malls
- Office buildings and more
Cost of filing a Chapter 7 for Business Bankruptcy
Based on the complexity of the case, you may end up paying your attorney a flat fee that can range from $750 to $7,500 or more. You will also have to pay a Bankruptcy Court filing fee of $300 for a Chapter 7 bankruptcy.
A competent lawyer will inform you about requirements and responsibilities of a Chapter 11 and Chapter 7 bankruptcy.