Law Office of Paul Petrillo

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Due to precautions related to COVID-19, we have expanded our options for remote consultations. Please contact our office to discuss whether a full phone consultation or video conference is appropriate for your situation. We can still accommodate in person meetings as well, while being mindful of social distancing guidelines.

Due to precautions related to COVID-19, we have expanded our options for remote consultations. Please contact our office to discuss whether a full phone consultation or video conference is appropriate for your situation. We can still accommodate in person meetings as well, while being mindful of social distancing guidelines.

Due to precautions related to COVID-19, we have expanded our options for remote consultations. Please contact our office to discuss whether a full phone consultation or video conference is appropriate for your situation. We can still accommodate in person meetings as well, while being mindful of social distancing guidelines.

What is a debtor-in-possession?

| Feb 18, 2016 | Chapter 11 |

If you own or share in the ownership of business in Salem that is facing seemingly insurmountable debt, bankruptcy is often your best option at being able to resolve those liabilities while still being able to save your company. However, if your business is incorporated, or owned by partnership or limited liability company, then your only option in filing for bankruptcy may a through a Chapter 11 case. When you file for this form of bankruptcy, you are given a special distinction. You go from being a standard debtor to what is known as a “Debtor-in-Possession.”

Being named as a debtor-in-possession allows you to maintain ownership of your company as you work your way through your bankruptcy case. There are, however, certain duties specifically related to your case that you are expected to perform. These are outlined in The Operating Guidelines and Reporting Requirements for Chapter 11 Cases for the federal Region 1, which New Hampshire is a part of. In essence, your job becomes to perform many of the same functions that a court-appointed trustee would in other bankruptcy cases. These include:

  •          Filing all federal, state, and local tax returns for your business.
  •          Following the payment hierarchy set forth by the court in the repayment of any pre-petition debts.
  •          Remaining current on all debt obligations assumed after having filed for bankruptcy.
  •          Prepare a list of both your largest unsecured creditors plus any equity security holders in your company.

Beyond these basic responsibilities, there are certain limitations placed on what you can and cannot do as a debtor-in-possession. You cannot pay any professional fees, borrow money for your business, or liquidate company assets outside of the regular course of business without the approval of the court.

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