Lets back up a minute here. I think the problem is that your dont understand chapter 11 bankruptcy.
Scenario 1. The business closes it's doors. All employees are fired and lose their jobs. All bills go unpaid, the contractors get nothing because there is nothing left, that is why it is called bankruptcy.
Scenario 2. The business files for reorganization. The creditors negotiate a lower settlement. Note, they still get PAID, it is just less than what they would have. The employees keep their jobs.
What part of Scenario 1 is better than senario 2.
Again, on your knees ready to suck.
No matter which way you go contractors will get fucked at the end of the day, he filed chapter 11 which means he's not such a great businessman yet you support him!
B4L
Chapter 13:
In a Chapter 13 proceeding, the debtor must pay all or part of his debts from the future income over a period of three to five years through his chapter 13 plan. For some people, the time period must be five years. If the court approves the plan of payment, the debts will be paid in full or partially by the chapter 13 trustee. Most of the debt that is not paid as set forth by the plan of reorganization will be discharged or wiped out. In other words, if your plan only provides for payment of 10% of the unsecured debt, then the remaining 90% plus any accrued interest will be discharged or wiped out upon completion of your plan. If your plan provides for payment of no money to unsecured creditors, then the entire unsecured debt is discharged upon completion of the plan.
However, most long term debt and home mortgages must be paid in their normal monthly payments either through or outside the plan, except for the payments that were due upon the filing of the case. Example: If a person is behind by 3 payments at filing and the house note was $500.00 per month, then the $1,500.00 plus any late charges or other fees can be spread out through the plan. Upon completion of the plan, the long term debt will be current and the ongoing payments will continue.
The plan can be approved, if it proposes to pay the debtor’s disposable income over the life of the plan, even if the creditors do not agree with the plan. In most cases, the plan payment will be less than the combined payments of the debts prior to filing, and the debtor can retain all of his assets provided he makes the payments as required and maintains insurance on items, such as his home and car which are security for loans being paid through or outside of the plan.
To qualify as a debtor under chapter 13 of the Bankruptcy Code, the Debtor must be an individual or a husband and wife, filing jointly. There are also certain debt limits for debtors filing under chapter 13, which are explained under the description of chapter 11 cases below.
Chapter 11:
Chapter 11 is the chapter used by large businesses to reorganize their debts and continue operating. Corporations, partnerships, and limited liability companies cannot use chapter 13 to reorganize and must cease business operations if a chapter 7 bankruptcy is filed. Chapter 11 cases are by far the most complicated of bankruptcy cases, and as a result, there are very few law firms that handle chapter 11 cases, but many times individuals and companies cannot obtain the relief they need under chapter 7 or chapter 13, thus a chapter 11 is their best option.
Corporations, limited liability companies (LLCs) and partnerships are not allowed to file for relief under chapter 13, thus Chapter 11 would be the only option for these entities if the one of these types of companies needs to reorganize and continue its operations. If any of these types of entities files for relief under chapter 7, the company must end its operations upon the filing of the case.
Finally, if an individual or a husband a wife that are filing jointly have debt that exceeds certain limits, then chapter 13 reorganization is not an option. These limits change every three years in April base upon the change in the cost of living since the last change. Until April 1, 2016, an individual or husband and wife filing jointly must owe unsecured debt which is less than $383,175 and secured debt which is $1,149,525. If an individual or husband and wife filing jointly, debts exceed either of these limits, then the only option to reorganize is under chapter 11.
