In the dynamic and often unpredictable economic landscape of California, businesses and individuals can sometimes find themselves facing overwhelming debt. While the term “bankruptcy” often conjures images of complete financial collapse, the reality is that the US Bankruptcy Code offers powerful tools for reorganization and debt management, providing a pathway toward a fresh start or a sustainable future. At KAASS LAW, we understand the complexities and anxieties in relation to financial distress, and we would like to dedicate in guiding individuals and businesses through the processes of bankruptcy reorganizations and arrangements in California.
What is Bankruptcy Reorganization?
Chapter 11 of the US Bankruptcy Code is usually falls under as a “reorganization” bankruptcy. Bankruptcy reorganization occurs when a corporation is unable to pay its outstanding debts or a company’s passives exceed actives. As such, bankruptcy proceedings are likely to be initiate. These proceedings are all under the federal bankruptcy court.
In the framework of bankruptcy reorganization, the insolvent corporation has a possible chance to draft and submit a reorganization plan to the court. The latter is aiming towards the financial recovery of a corporation. If the given reorganization plan is approved by the court, the corporation can continue its business activity since the payment of debts impeding corporate operations is adjourned.
What Should a Reorganization Plan Include?
The reorganization plan must include all the necessary measures deemed necessary to decrease costs and increase the income of the corporation. The measures may refer to:
- Changes in ownership of shares;
- Financial restructuring;
- Merger and acquisitions;
- Recapitalization;
- Substitution of management.
What If A Reorganization Plan Isn’t?
If a reorganization plan is rejected by the court, the corporation is doomed to liquidation. That said, its assets will be sold to satisfy the claims of the creditors.
Who Undertakes The Responsibility For Carrying Out A Reorganization Plan?
Pursuant to Corporation Code of California section 1400 of the trustee or trustees of a corporation appointed in the reorganization proceeding are vested the authority to exercise a reorganization plan or court orders without further consent by the corporation board or shareholders.
What Kind Of Powers Do Trustees Of A Corporation Have?
The powers of trustees, among other things, may include:
- Alteration or amendment of bylaws;
- Constituting or reconstituting the board;
- Substituting directors and officers;
- Changing capital stock;
- Authorizing to issue bonds;
- Electing to wind up and dissolve the corporation.
Dissolving A Corporation
If the reorganization does not succeed, or the trustees have elected to dissolve, the corporation should elect to “wind up” the corporation. As such, the trustees would file a certificate of dissolution with the Secretary of State.
What Requisites Are There For The Certificate Of Dissolution?
To start, the trustees sign and verify the certificate of dissolution when the corporation is completely up and ready. It shall state the following:
- Corporation’s name;
- The identification of the court in which the order for relief upon entry;
- Court’s file number for the matter;
- An order confirming a reorganization plan is entering into the case;
- The undersigned has, upon appointment, by the court as a trustee;
- The shares of the corporation have been canceled pursuant to the terms of the plan;
- The assets of the corporation have been distributed pursuant to the terms of the plan;
- The corporation is complete in dissolution.
Why Choose KAASS LAW For Bankruptcy Reorganization and Arrangements?
Navigating the complexities of bankruptcy reorganization and arrangements requires experienced legal counsel. At KAASS LAW, we offer:
- Comprehensive Case Evaluation: We provide a thorough analysis of your financial situation to determine the most appropriate bankruptcy chapter and strategy.
- Expert Guidance: Our knowledgeable attorneys guide you through every step of the process, ensuring you understand your rights and obligations.
- Strategic Planning: We work with you to develop a tailored reorganization or repayment plan that aligns with your goals and financial realities.
- Creditor Negotiation: KAASS LAW will fight tooth and nail if we have to. Our expert team knows how to settle and aim towards a resolution that is in your favor.
- Court Representation: If you, the client, are in need of legal representation to appear for you in court, KAASS LAW can make that arraignment.
- A Path to Financial Recovery: Our main and most important goal is to help you start a clean slate and fresh financial start or sustainable future for your business.
If you are struggling with a financial hurdle that you cannot jump across, don’t deal with this problem alone. As a result, with our services, we can overcome and achieve in helping you with your overwhelming debt. Finally, contact KAASS LAW today for a confidential consultation. We are here to provide the expert legal guidance and support you need to explore your options and take the first step towards a brighter financial future. Additionally, our firm offers expert business guidance through a scheduled consultation service. For instance, we can offer and navigate any opportunity to buy out your business partner.