View or Download a Printable Chapter 11 Small Business Case TimeLine
This printable Chapter 11 timeline for small businesses is designed to help you visualize the entire process.It will give you a better idea of how long it takes and the costs from your initial bankruptcy filing to closing on your Chapter 11 Timeline bankruptcy.
Chapter 11 Timeline Instructions:
- Click anywhere on the image above, then print off the Chapter 11 Small Business Case TimeLine.
- A numbered reference ( ) appears at the end of many of the captions on the timeline. The reference numbers correspond to the Notes below.
(1) The Fair Debt Collection Practices Act…
Prohibits debt collectors from contacting your business once you (or your attorney) notify them (by phone, mail, email, or meeting) that a bankruptcy attorney now represents your business. You must also give the attorney’s name and complete contact information to the debt collectors. Debt collection agencies may only contact your attorney, and any contact that violates the law will be subject to fines..
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, as a practical matter, Once it is known that your company is seeking bankruptcy, most collection efforts will stop anticipating and an automatic stay ordered by the bankruptcy court.
(2) Chapter 11 Small Business Case Petition filed with the Bankruptcy Court:
At a minimum, the initial filing MUST at least include:
- Voluntary Petition for Non-Individuals Filing for Bankruptcy (Official Form 201),
- Creditor/Mailing Matrix – A list of names and addresses of all the debtor’s creditors, formatted as a mailing list according to instructions from the bankruptcy court in which the debtor files, and
- List of Creditors Who Have the 20 Largest Unsecured Claims Against Debtor and Are Not Insiders (Official Form 204) along with payment of…
- Filing Fee $1,167 and
- Administrative Fee $571.
Also, there are 14 additional Schedules and supporting documents that the court prefers to receive as part of the submission. However, the court allows up to 14 days following the initial submission for your business to file these additional documents.
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, and becomes a “Debtor-In-Possession” upon filing the bankruptcy petition (unless the court believes the representatives of the business may 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 that 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, conduct and operations of the business to make sure the representatives faithfully perform its fiduciary duties.
(3) Within 24 to 48 hours of receiving the bankruptcy petition…
The court will issue an “Automatic Stay“ and hold the 1st Day Hearing. The Automatic Stay immediately suspends all collection efforts for “non-priority debt” collection efforts, foreclosures, evictions, repossessions, and pending and contemplated lawsuits, until granting, converting, or dismissal of the court.
Once your business files its bankruptcy petition, the business may no longer incur expenses of any kind, pay bills, or use credit without prior permission from the court. The bankruptcy attorney will file “1st-Day Motions” with the bankruptcy petition, asking the court’s blanket approval allowing the business to conduct all financial transactions and operations that are 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 – known as a “DIP Loan” – that will enable the business to borrow cash needed to pay expenses necessary to keep operating during the progress of the bankruptcy case. These motions will be reviewed and ordered during the 1st Day of Hearing.
(4) Initial Debtor’s Interview with the U.S. Trustee:
The U.S. Trustee reviews all documents submitted and determines whether the business is able to submit a viable plan of reorganization. He or she explains what steps will be taken in handling the case and what is expected of the company and its representatives – information and conduct – as well as the role of the court and the U.S. agency. Trustee, and answer any related questions.
Within the first two weeks (usually sooner), the business’s representatives must meet with the U.S. Trustee.
The U.S. Trustee is not authorized to give legal advice.
(5) Section 341 Meeting of Creditors:
The Bankruptcy Code requires the business’s primary representative to attend this meeting in person. The bankruptcy attorney may accompany the business representative but may not attend in lieu of the business representative.
The meeting will typically run from 10 to 20 minutes and creditors rarely attend. The purpose of the meeting is to allow the U.S.
Trustee (and creditors present) to question the representative(s) under oath about the truthfulness and accuracy of all forms filed with the court and to obtain any additional or clarifying information that may be necessary.
(6) Monthly Report:
The business have to file a monthly report(Form 425C) by the 21st day after the end of the month is reported.
Monthly reports are due each month following the filing of the Petition, continuing until Plan confirmation.
(7) 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.
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.
Along with the payment of fees, you have to file the quarterly statement of fees under chapter 11.
(8) Confirmation Hearing:
The court will consider and resolve objections to the Plan. And the creditors and equity interest holders will vote to accept or reject the Plan.