Illinois Bankruptcy - Chapter 11

A Illinois bankruptcy filed under chapter 11 laws is frequently referred to as "reorganization". Chapter 11 is more complex than other chapters and offers a wider range of options. Ch. 13 also provides reorganization but is restricted to allow only individual filers, subject to limits on total debts, income, and plan terms. An Illinois bankruptcy under Ch. 13 is sometimes referred to as a wage earner plan.

A chapter 11 case begins with the filing of a petition. The petition may be a voluntarily filed by the debtor or filed by creditors. The code provides specific conditions which limit involuntary petitions filed by creditors. The standard petition form identifies the debtor by a variety of personal information all of which are subject to cross referencing and verification and must describe the proposed plan of reorganization. Voluntary petitions may elect qualification as a small business as provided by 11 U.S.C. 101(51)(C) or 11 U.S.C. 1121(e). Small business classification permits streamlined administration, by combining administrative hearings and allowing alteration of statutory deadlines and waiting periods.

Illinois Bankruptcy

Once filed, the petitioner automatically becomes a debtor-in-possession as described in 11 U.S.C. 1101. As a term of legal art, this term is defined by statute and includes a wide assortment of responsibilities and privileges. In chapter 11 filings, the debtor retains possession of assets. The debtor also is empowered to dispose assets until the plan of reorganization is confirmed, dismissed, converted to Ch. 7, or preempted by appointment of a trustee by court order. While an Illinois bankruptcy case under chapter 11 is pending, a debtor-in-possession is authorized to continue business operations, pay debts, pay expenses, and limit or suspend payments to special defined classes of creditors.

Normally a trustee is not appointed in chapter 11 Illinois bankruptcy. A debtor-in-possession continues operation of the business and/or personal affairs while assuming many roles traditionally performed by a trustee in consumer cases. 11 U.S.C. 1107(a). The debtor-in-possession prepares the plan, responds to creditor motions and is liable (including criminal liability) for compliance with applicable laws. In almost all Illinois bankruptcy cases filed under chapter 11, debtors are represented by an attorney. anyone who files an Illinois bankruptcy case under chapter 11 potentially receives the greatest range of options, which in turn, requires time intensive legal expertise to receive these benefits.

Selecting the correct chapter to maximize results may seem to be a daunting task. The process of selection necessarily begins with familiarity with current laws. Because laws change frequently as new decisions are rendered, local attorneys who are familiar with the practices of each judge are an ideal source of information.

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