A Chapter 11 bankruptcy in California doesn’t wipe the slate clean. Rather, it reorganizes a company’s financial obligations. It is a process that is open to some individual debtors as well. For the business owner, it’s an attractive option that lets a company operate while the courts work to resolve the bankruptcy. One element of the process is the confirmation of the Chapter 11 reorganization plan.
Who confirms the reorganization plan?
When you work on the details of your company’s bankruptcy filing, one consideration is the proposal of a plan. You need to file it within 120 days from the day that you filed the petition with the court. This plan lists your creditors and proposes a repayment schedule for meeting your financial obligations going forward. The bankruptcy judge will sign an order that approves the plan.
Why is the confirmation crucial for your business?
Your creditors review the Chapter 11 reorganization plan. They have the power to object to your proposal. However, if the deadline passes without any objection, the court considers that the plan met the Chapter 11 requirements.
When the judge signs the order of confirmation of the Chapter 11 reorganization plan, it binds you and your creditors to the provisions. It’s too late for a creditor to object or decide they don’t want to go along with the proposal after all. For the business owner, this provides the opportunity to move forward.
What happens next?
After the court confirms your Chapter 11 reorganization plan, you implement it. Depending on the provisions, this may involve the sale of assets or the amendment of security agreements. Moreover, you will require court authority to engage in certain financial transactions