In a Traditional Chapter 11 case there is no Trustee: a debtor is on its own dealing with creditors and the Court. In a new Small Business case, a Chapter 11 Trustee is appointed. Unlike a Chapter 7 Trustee, however, who is only interested in liquidation and is an adversary, a Small Business Chapter 11 Trustee is a partner in attaining a successful reorganization. This Trustee has a true incentive to assist in obtaining court approval of a Plan of Reorganization, because her or she will receive a commission only if the business makes money Furthermore, the trustee will get paid at the end of the case. The Trustee will assist in convincing creditors to approve a plan, or in structuring a plan that the Court can approve despite creditor opposition.
This is only one of the many reasons the new Small Business Bankruptcy Chapter 11 may be a real “life-saver” for struggling small business owners.
Paul Hollender is Board-Certified in both Business and Consumer Bankruptcy, and has been helping business owners deal with financial difficulties for 43 years.
If you think this new law might help you, please call (718) 442-4424 to schedule an evaluation and strategy meeting.