Downloadable Chapter 11 Timeline for a Pre-Packaged, Small Business Case

Chapter 11 small business bankruptcy cases can be submitted on a pre-packaged basis. This means the initial bankruptcy petition (filed with the court), is accompanied by the plan of reorganization and enough ballots from creditors accepting the plan. Typically, the reorganization plan will be filed after it has been approved by the board. A few weeks later, the ballots are collected.  A Pre-Packaged Chapter 11 Timeline submission significantly speeds up the case processing and reduces legal expenses.

You can benefit from looking at a “what if” scenario before and during your chapter 11 small business bankruptcy. You might be able to realize that your business plan is too ambitious, or that it needs some tweaking. Find plans you can visualize, print or download this timeline for a pre-packed chapter 11 small business bankruptcy.

Instructions:

  • Click anywhere on the image above, then print off the timeline.
  • A numbered reference ( ) appears at the end of many of the captions on the timeline. The reference numbers correspond to the Notes below.
reference number instructions for printable business bankruptcy timelines

Notes:
(1) The Fair Debt Collection Practices Act…

Prohibits debt collectors from contacting your business once you (or your attorney) notify them. This can be done by phone, mail, email, or meeting by the bankruptcy attorney now represents your business. You must also give the attorney’s name and complete contact information to the debt collectors. Debt collectors may contact your attorney before contacting you. These are the fines imposed for Violating the law. The Act does NOT prevent debt collectors or creditors from continuing efforts to collect the debt. Nor does it pause a pending lawsuit or prevent creditors from bringing a new suit against your business. However, after you know your business is pursuing bankruptcy, most collection efforts will stop. This is in lieu of anticipating the bankruptcy court’s issue of the Automatic Stay.

(2) 90-Day (theoretically) Plan Development, Negotiation, and Solicitation Period:

  • The business drafts the Plan of Reorganization, while
  • The attorney negotiates (and re-negotiates) settlements with creditors, which results in
  • On-going revisions to the Plan until there is sufficient creditor acceptance to enable the court to confirm the Plan when submitted.
  • Two-thirds of the Equity Interest Holders (business owners) must vote in favor of the Plan.
  • The business completes the bankruptcy Petition, Plan of Reorganization, and Disclosure Statement forms. The attorney will advise which of the Exhibits, Schedules, and supporting documents that usually accompany these filings are necessary, and
  • The attorney solicits the unsecured, impaired creditors, for ballots voting in favor of the plan. These are people who will get less than full repayment of the debt owed to them.

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(3) Chapter 11 Pre-Packaged Small Business Case Petition is filed with the bankruptcy court:

The filing package consists of the forms and documents typically submitted for a Chapter 11. This corresponds to Small Business Case filing, and includes the following:

  • Voluntary Petition for Non-Individuals Filing for Bankruptcy (Official Form 201),
  • Creditor/Mailing Matrix – This is the list of names and addresses of all the debtors and creditors. It is formatted as a distribution list in accordance with the bankruptcy court’s instructions. The court in which the debtor files.
  • List of Creditors Who Have the 20 Largest Unsecured Claims Against Debtor. And are Not Insiders (Official Form 204). This should include the payment of…
  • Filing Fee $1,167 and
  • Administrative Fee $571.

In addition, this initial filing will also include:

  • Disclosure Statement (Form 425B),
  • Plan of Reorganization (Form 425A),
  • Creditor Ballots evidencing sufficient acceptance of the Plan from the impaired creditor classes meeting the thresholds necessary for the court to confirm the Plan.

Also, there are 14 additional Schedules and supporting documents required for filing an ordinary Small Business Case. The District Court serving your area may not require all of these for a Pre-Packaged case.

Your bankruptcy attorney will suggest which of your assets need to be included in the bankruptcy petition and will file several “1st Day Motions. One of these will be a motion for an expedited processing of the pre-packaged case.

In most types of bankruptcies, the debtor must relinquish control of all property/assets to a court appointed trustee. Chapter 11 cases are the exception.

The business retains control over itself. Its property/assets, becomes a “Debtor-In-Possession” upon filing the bankruptcy petition. This is unless the court believes the representatives of the business are not legitimate. They might have committed fraud, misconduct, or are grossly incompetent. However, as a Debtor-In-Possession (DIP), the business is now a fiduciary with all the powers and duties of a trustee. He must preserve and protect the property of the business. And must conduct the business in the best interests of its creditors. The U.S. Trustee oversees the case and closely monitors the activity. He also conducts the operations of the business. He should make sure that the representatives faithfully perform its fiduciary duties.

(4) 1st Day Hearing:

The court will hold a 1st Day Hearing within 24 to 48 hours of its receipt of the filing package. The court will issue an Automatic Stay.”. The Automatic Stay restrains non-priority debt collection, Foreclosures, Evictions, Repossessions, and Lawsuits immediately for the bankruptcy period.

At this meeting, the court will consider all 1st Day Motions filed by your attorney, including the motion for expediting the case.

Once your business files its bankruptcy petition, the business may no longer incur expenses. The expenses can be of any kind. Be it paying the bills or using credit without prior permission from the court. The bankruptcy attorney will file “1st-Day Motions” with the bankruptcy petition. He will ask the court’s blanket approval allowing the business to conduct all financial transactions. He will also seek approval for operations necessary in the ordinary course of running the business. The attorney will also include a motion asking the court to approve “Debtor-In-Possession “borrowing”. This is called a “DIP Loan”. This will enable the business to borrow cash needed to pay expenses. And pay expenses necessary to keep operating during the progress of the bankruptcy case.  These motions will be reviewed and ordered during the 1st Day Hearing.

The court will set the deadline for creditors to file any objections at 28 days from the date of the petition. Also, the court will set the date for the combined Disclosure Statement and Plan Confirmation Hearing 35 days from the petition filing date.

(5) Initial Debtor’s Interview with the U.S. Trustee:

Within the first two weeks (usually sooner), the business’s representatives must meet with the U.S. Trustee. The U.S. Trustee will review all filed documents, determine that the business will be able to present a viable Plan of Reorganization, explain the steps in the processing of the case and what the court expects – information and conduct – from the business and its representatives, the role of the court and the U.S. Trustee, and answer any related questions. The U.S. Trustee is not permitted to provide any legal advice.

(6) Monthly Reports:

The business must file a Monthly Report (Form 425C) by the 21st day following the close of the month being reported on. Monthly reports are due each month following the filing of the Petition, continuing until Plan confirmation.

(7) Confirmation Hearing:

The court will consider and decide objection to the plan. They will vote on whether or not to accept or refuse the plan.

(8) Plan Confirmation Stay/Plan Effective Date:

Assuming sufficient approval of the plan from impaired creditors. There follows a rejection of the objections and a confirmation of the plan. The court would then issue an order of confirmation effective immediately.  The court will then attempt the confirmation process immediately or impose a confirmation stay of at most 14 days following the combined Disclosure Statement and Confirmation Hearing. The Plan becomes effective at the expiry of the Stay. The court will verify that your lender has the right to the amount of credit for your interest. 

  • DIP Loans
  • All delinquent payments for “reaffirmed” secured debts
  • All delinquent payments for “accepted” leases and service contracts
  • All administrative expenses and fees

(9) Quarterly Fees:

The Code requires the payment of quarterly fees for the services provided by the U.S. Trustee. The fee is based on the total dollar amount of disbursements made by the business during the calendar quarter. It is payable at the end of each calendar quarter during the period starting with the Petition Date and ending with the order of the Final Decree. The minimum quarterly fee is $250. If total disbursements during the quarter exceed $62,624, the fee is 0.4% (.004) of the total quarterly disbursement. File the Chapter 11 Quarterly Fee Statement together with payment of fees.

Download Pre-Packaged Chapter 11 Timeline For Small Business today.

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