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What Do Each Of The Bankruptcy Chapter Numbers Mean?

bankruptcy numbers meaningBankruptcy is governed only by federal law. The federal laws of the United States are “codified” within books of various groups, almost like volumes, with each volume receiving a numerical title. For example, Veterans Benefits are addressed in Title 38 of the U.S. Code whereas Title 17 addresses Copyrights. Bankruptcy is found in Title 11 of the U.S. Code. Each title is further divided into Chapters. Under Title 11, the different Chapters refers to the different types of bankruptcy. Here are the types of bankruptcy addressed by each of the chapters within Title 11.

Chapters 1, 3 and 5 of the Bankruptcy Code deals with generic issues within all of Bankruptcy law, like definitions, how Trustee’s are selected, as well as who files claims in the cases and when, to name a few. Chapters 1, 3, and 5 are not Bankruptcy Chapters that someone can elect to file a petition under.

Chapter 7 Bankruptcy deals with basic liquidation of assets for both individuals and businesses. It is the simplest and/or quickest form of bankruptcy. It involves the liquidation of non-exempt assets by a Chapter 7 Trustee, with the goal of obtaining a discharge which acts as a legally binding document absolving the individual from having to pay back any debts that were not repaid from the liquidation of assets. However, there are certain exceptions to these general rules.

Chapter 9 Bankruptcy deals with the resolution of the debts of municipalities. For example, Detroit, MI filed Chapter 9 bankruptcy on July 18, 2013.

Chapter 11 Bankruptcy deals with the financial reorganization of businesses (corporations). It is sometimes used by individuals with substantial debts. Chapter 11 allows a company to continue doing business while adhering to a debt repayment plan (or “Plan of Reorganization”) agreed upon by the bankruptcy court. Most often this debt repayment plan involves a repayment of some, but not all, of the indebtedness owed by the company over a period of a few years, based upon the company’s ability to pay. Each Chapter 11 Plan of Reorganization is unique and molded to the needs of the debtor in that case.

Chapter 12 Bankruptcy deals with the rehabilitation of debts for family farmers and fishermen. In such cases, filing a petition stops collection actions by creditors. A trustee is appointed to evaluate and oversee the case, collect payments from the debtor, and disburse payments to creditors.

Chapter 13 Bankruptcy deals with the rehabilitation of debts for individuals with a source of regular income. Chapter 13 allows for the development of a repayment plan to repay all or part of the debts owed over a three to five year time period. This repayment plan is overseen by a Chapter 13 Trustee. The ultimate goal of a Chapter 13 is to receive a discharge, which acts as a legally binding document absolving the individual from having to pay back any debts that were not repaid (in whole or in part) in the plan. Chapter 13 has certain advantages over a Chapter 7, in that it can discharge certain debts that are excepted from discharge in a Chapter 7.

Chapter 15 Bankruptcy provides a mechanism for dealing with “cross-border” insolvency or debtors of foreign countries to resolve debts owed to creditors in the U. S.

Chapters 8, 10, and 14 are not published within the U.S. Code, and were reserved for Congress to toy with in the future. For more information on bankruptcy law, visit one of the links provided or contact our team today!

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Skymall Filing Chapter 11 Bankruptcy

If you’ve flown any major airline throughout the U.S. in the past several years, you’ve undoubtedly stumbled upon a SkyMall magazine. SkyMall provides passengers with a unique shopping experience and even more unique gifts for purchase. Sadly, SkyMall filed for relief under Chapter 11 of the bBankruptcy Code in November of 2014.

Its largest supporters, including Delta Airlines, have ended their subscriptions due to decreased customer interest. The decision is attributed to the use of in-flight internet connectivity available to all passengers as well as other activities such as e-readers and games, which help to combat the monotony of staring at the back of the seat in front of you.

skymall bankruptcySkyMall reported retail revenue of about $37 million in 2013 but had decreased to 15.8 million in the first nine months of 2014. It listed assets between $1 and $10 million in its bankruptcy petition with total liabilities of approximately $12 million. In January 2015, the company laid off 47 employees, about 33% of its total work force. The future of the company is still uncertain, as the company may have a potential buyer but a deal has yet to be agreed on. Until then, you may want to start stocking up on essentials like this Serenity Cat Pod.

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December 2014 News

On December 18, 2014 Partner Charles M. Ivey, III and Associate Justin Kay were successful in getting a Plan of Reorganization confirmed in an individual Chapter 11 case. The individual held an ownership interest in assets worth $44,600,000 as of the filing of the bankruptcy case, as listed on the petition. Due to a few failed ventures, in addition to some mounting tax debts, the individual filed for relief under Chapter 11 of the Bankruptcy Code. Almost two years later, and after filing a total of six separate Plans of Reorganization, the firm of Ivey, McClellan, Gatton & Talcott, LLP were successful in getting every creditor of the Debtor to agree to the Plan treatment as proposed. To paraphrase from a comment of another individual within the Bankruptcy bar, the work on this case was of such superior quality that it compares favorably with any successful Chapter 11 in this district in the last five years. Congratulations for all the hard work performed on this case, and the successful result obtained.

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