San Diego Business Reorganization Lawyer

A Chapter 11 bankruptcy reorganization can consist of either rehabilitation of the San Diego debtor's business or the orderly liquidation of the debtor's assets; either course of action or a combination of both courses of action is permitted.  Although liquidation plans are authorized, most courts suggest that the paramount policy and goal of Chapter 11, to which all other bankruptcy policies are subordinated, is the successful rehabilitation of the debtor. In either case, the goal of Chapter 11 debt relief is to maximize the value of money and property available for distribution to creditors.  San Diego bankruptcy lawyers will agree, the primary purpose of Chapter 11 is to achieve reorganization of the debtor and to maximize the value of the estate.

A debtor in San Diego achieves the purpose of Chapter 11 bankruptcy by facilitating the reorganization and rehabilitation of the debtor as an economically viable entity.  Chapter 11 enables a business to reorganize itself and continue as a going concern; it provides the debtor with legal protection in order to restructure its business debts so that the business can continue to operate and creditors can receive the going concern value of estate assets as opposed to the liquidation value, which is generally considered to be far less.   Resort to the protection of the bankruptcy laws is not proper where a Chapter 11 debtor lacks the prerequisites because there is no going concern to preserve, there are no employees to protect, and there is no hope of rehabilitation, except according the San Diego debtor's “terminal euphoria.”

Chapter 11 bankruptcy reorganization also provides for:

Repayment to creditors

Preserves jobs for San Diego employees

Produces returns for shareholders

Allows the expeditious resolution of disputes

Preserves economic units

Permits the debtor to offer its goods and services

They are therefore encouraged if there is a reasonable possibility of success.  Moreover, the public has an interest in successful rehabilitation of debtors and in the granting of substantial dividends to creditors.

The Bankruptcy Code does not guarantee successful San Diego bankruptcy reorganization, but assists the financially distressed business enterprise by providing a breathing spell to return to a viable state, to rehabilitate its business and eventually generate revenue, to adjust and compromise its debts, to have a respite from pending litigation, and time to provide for debtors to implement plans of repayment to creditors. A reorganization petition should not be used merely as a device to serve some sinister or unworthy purpose.  Our experienced San Diego business bankruptcy lawyers will determine if Chapter 11 is right for you.

Confirmation of a plan of business reorganization is the statutory goal of every Chapter 11 San Diego bankruptcy case. The ultimate goal of the debtor is judicial confirmation of the business reorganization plan that enables the debtor to restructure its debts, pay its creditors and return to active operation as a viable San Diego enterprise, free from judicial control and creditor scrutiny. The burden of proposing a plan that satisfies the Bankruptcy Code requirements always falls on the bankruptcy plan proponent, but falls particularly heavily on debtors in possession and trustees, because they stand in a fiduciary relationship to the estate's creditors.

The plan of business reorganization is the vehicle by which the San Diego debtor accomplishes its rehabilitation. The essential purpose of Chapter 11 bankruptcy is to provide a plan of business reorganization whereby claims of creditors can be, at least partially, satisfied. The plan of reorganization is the blueprint by which prepetition debts are satisfied, discharged, or otherwise dealt with and the bankruptcy plan is the foundation of the viable postconfirmation enterprise constructed.

The Chapter 11 bankruptcy plan arises by operation of federal bankruptcy law.  It resembles a consent decree and should be constued basically as a contract; it bears a close analogy to a private contract between the debtor and its creditors and binds the parties. General state law principles should be applied to interpret and construe the terms of a reorganization plan.

As San Diego small business bankruptcy lawyers, we at the Law Office of Harold D. Thompson have been helping business owners reorganize and liquidate their operations for over 35 years.  Don’t trust your business bankruptcy to just any law firm.  Call our office TODAY for a free case evaluation.  619.615.0767 or visit our other websites at San Diego Bankruptcy Lawyer Blog or My San Diego Bankruptcy for more information.