The Plan of Reorganization in Maryland: Business Recovery
If your business debt is accumulating and you don’t know how to keep your business afloat, you may feel like you’re drowning. You don’t want to lose the business that you have worked so hard for, but your business debt continues to stack up. Debt does not have to be the end of your business.
The Chapter 11 Plan of Reorganization in Maryland presents a detailed roadmap for businesses to strategically restructure debts, stabilize financially, and streamline business operations.
In this article, we will explore the components and processes of the Plan of Reorganization to show you how Chapter 11 can assist your business in becoming financially stable and profitable again.
Table of Contents
What is the Plan of Reorganization in Maryland?
The Plan of Reorganization is a fundamental component of Chapter 11 bankruptcy. It’s essentially a blueprint for a business’s financial rehabilitation, outlining how your business will address liabilities while ensuring that it remains viable.
The plan doesn’t just address what debts your business owes, but how your business will drastically decrease its debts.
Chapter 11 provides businesses with the flexibility to alter the length of loan terms, among other critical details. The Chapter 11 Plan of Reorganization lays out a transparent structure, offering both your business and its creditors a definitive way forward during these challenging periods.
The Core Purpose of the Plan of Reorganization in Maryland
Your Plan of Reorganization serves as a roadmap for how your business will address its debts and become profitable again. Generally, the plan addresses debt in the following way:
- Creditor Classification: The plan pinpoints which creditors you’re committed to paying and allows you to sort them into classes.
- Payment Timeline: It defines the period during which these payments will be made.
- Terms and Interest: It can adjust the duration, interest rates, and other stipulations related to debt obligations
- Terms and Interest: It can adjust the duration, interest rates, and other stipulations related to debt obligations.
- Paying Less: Chapter 11 can allow you to pay less to certain classes of creditors.
The overarching goal of Chapter 11 is to address debts while paving the way for your business’s future success.
Key Components of a Plan of Reorganization
Understanding the key components of the plan can help ensure a smoother path to recovery.
Classification of Claims and Interests
First, it’s essential to differentiate between secured creditors, unsecured creditors, and priority creditors. This distinction can drive the repayment priority. Additionally, how claims are classified can influence who votes for the plan and if the Court will approve it.
Treatment of Claims and Interests
You and your bankruptcy attorney will then organize creditors into classes, detailing how each will be compensated. Recognizing any impaired claims is crucial, as these creditors get to vote for or against the plan.
Means for Implementation
What’s the game plan during the reorganization after the Court confirms the plan? Whether it’s shifts in management, sales of assets, pursuing legal claims, or a complete overhaul of the business model, this component delves into the operational strategies.
Feasibility
For Chapter 11 bankruptcy to be successful, the plan must be feasible, which means it must have a probability of success. This component ensures that your business can realistically stick to the proposed arrangements and thrive long-term.
The Process of Developing and Confirming the Plan
Creating and getting the Plan of Reorganization in Maryland confirmed is key. It’s about crafting a workable plan and getting Court approval. Each step is crucial for your business’s revival. Let’s dive into the details of how a plan is developed and confirmed.
Disclosure Statement
The purpose of the Disclosure Statement is to allow your business to tell its story: how it ended up in Chapter 11 and how the plan will keep your business running and profitable. It has many requirements to ensure that your creditors can make an informed decision on how to vote for the plan. The Court must also approve the Disclosure Statement.
Voting Process
In your Chapter 11 plan, creditors are divided into groups or “classes.” If a class is impaired, it can vote to approve or reject the reorganization plan. Transparency and fairness during the voting process play a significant role in garnering support for your Plan of Reorganization.
Confirmation Hearing
Next, the Court will review the proposed Plan of Reorganization to determine whether it’s a viable way to pay back creditors and meets the requirements of the Bankruptcy Code. Even if a plan receives a favorable vote from the required classes of creditors, the Court still has to ensure the plan meets specific requirements under the bankruptcy code.
Conversely, even if the plan is rejected by creditors, the Court may “cram down” the plan, confirming it over the objections of creditors–provided it meets other criteria established by the Bankruptcy Code.
Challenges in Drafting a Successful Plan
Crafting a successful plan is intricate and complicated. Various hurdles and challenges may arise throughout the process:
- Striking the Right Balance: It’s important to meet the fiduciary duties that you have to your creditors and ensure your business has a sustainable future. Many times, prioritizing one over the other could jeopardize the success of your plan, and an experienced attorney can help you find a happy medium.
- Anticipating Objections: It’s beneficial to address potential objections from creditors early on. Doing so can save you time, money, and stress down the line.
- Staying Agile: Even while dealing with bankruptcy procedures, your business must be responsive to changes that can occur during a Chapter 11 case.
Navigating these challenges alone is nearly impossible, which is why you should consult with an experienced bankruptcy attorney.
Post-Confirmation: Implementation and Oversight
After your Plan of Reorganization in Maryland is approved by the Bankruptcy Court, it’s time for the rubber to meet the road.
Timeline for Action
The Chapter 11 Plan itself will dictate the pace. It sets specific milestones and deadlines for completion and putting the plan into action. Now, you will begin to put the Plan of Reorganization into practice.
Debtor in Possession (DIP)
When you file for Chapter 11, you become a “Debtor in Possession (DIP).” As a DIP, you retain control and management of your business’s assets and operations, but you must operate under the oversight of the Bankruptcy Court and in compliance with the regulations of the Bankruptcy Code. A Chapter 11 bankruptcy attorney will shepherd you through the entire Chapter 11 process, ensuring you follow your obligations as a Debtor in Possession.
How a Chapter 11 Attorney Can Help
- Work with you to develop a Plan of Reorganization to get your business out of debt;
- Advise you on the intricacies of the bankruptcy laws;
- Communicate and negotiate with creditors to reduce your business’s debt and secure favorable terms;
- Navigate the plan voting and confirmation process;
- Ensure that your Reorganization Plan meets all requirements, allowing your business to emerge debt-free and profitable.
Having an experienced Chapter 11 attorney by your side can make the difference between a seamless financial recovery and a prolonged financial struggle.
Why Work with Steiner Law Group
Here’s why you should partner with Steiner Law Group:
- We have helped thousands of Maryland residents to discharge millions of dollars of debt.
- Steiner Law Group brings a wealth of Chapter 11 experience to the table. We provide high-quality services and work closely with our clients.
- Our dedicated team keeps the lines of communication open, ensuring you’re informed every step of the way.
- We tailor our bankruptcy strategy to address your unique business challenges and needs.
Work With Us!
If debt is weighing down your business and you want to keep your business open, please contact us today or call us at (410) 670-7060.
