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US Chapter 7 of the Bankruptcy Code
US Chapter 7 of the Bankruptcy Code
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
US Chapter 7 of the Bankruptcy Code
Businesses most often file for bankruptcy under Chapter 11 or Chapter 7 of the Bankruptcy Code. While Chapter 11 historically has proven more useful to large businesses, changes under recent federal laws may make it a good option for small businesses during the COVID-19 outbreak.
A standard filing under Chapter 11 involves agreeing with creditors on a proposed reorganization plan, which will be confirmed by a court if enough creditors accept it. This allows the business to continue operating, which would not be possible if the business filed for bankruptcy under Chapter 7. The seven largest unsecured creditors of the business will form a creditor committee to monitor the operations of the business and help develop the reorganization plan. The creditor committee process can become costly, since it may involve retaining attorneys and experts to investigate the business. Also, a reorganization plan may not be finalized for over a year after the debtor files, due to the complexities of negotiating with creditors. The cost and inefficiency of Chapter 11 thus have made it unattractive to many small business owners in the past.
US Chapter 7 of the Bankruptcy Code
Sometimes a small business will file for bankruptcy under Chapter 7, although this chapter is more commonly associated with individual bankruptcy. After the business files, a bankruptcy trustee will liquidate its assets and distribute the proceeds among creditors. However, a Chapter 7 discharge is not available to businesses that have shut down already. Most small businesses that have closed because of the COVID-19 outbreak thus will not qualify for this form of relief.
US Chapter 7 of the Bankruptcy Code
Chapter 7 may be more attractive to sole proprietors than other business owners. This is because sole proprietors who file under Chapter 7 can receive a discharge for personal debt as well as business debt. Thus, they can greatly reduce their overall debt burden and rebound more quickly from the COVID-19 outbreak. A sole proprietor with a service-oriented operation may even be able to keep the business open by relying on their own labor, while the bankruptcy trustee sells the assets of the business. However, the bankruptcy trustee has the discretion to decide whether a business can stay open in these circumstances. A trustee sometimes may allow a business to stay open if it has liability insurance, or a trustee may not allow a business to stay open at all.
US Chapter 7 of the Bankruptcy Code
Bankruptcy under Subchapter V of Chapter 11 sometimes resembles a Chapter 13 bankruptcy. Subchapter V eliminates the creditor committee requirement in Chapter 11 and allows a bankruptcy trustee to monitor the debtor’s payments. Thus, the owners retain greater control over the business. Subchapter V also provides more efficient relief. A debtor submits their proposed reorganization plan within 90 days of filing for bankruptcy. It requires approval from a judge but not from creditors. A judge will approve a plan if it is fair and equitable, and if it seems at least reasonably likely to succeed. Often, a plan allocates the disposable income of the debtor toward repaying creditors over the next three to five years. To remain eligible for this relief, the business must keep up with plan payments during the applicable time.
US Chapter 7 of the Bankruptcy Code
These benefits come with certain specific requirements. For example, the business must submit a wide range of financial disclosures and reports throughout the process. The managers of the business must attend a series of meetings, including a debtor interview, a scheduling conference, and a Section 341 meeting of creditors. The business also must keep up with taxes and insurance, and it must allow inspections of its property, books, and records with reasonable notice.
US Chapter 7 of the Bankruptcy Code
The Consolidated Appropriations Act of 2021 (CAA) included additional amendments to the Bankruptcy Code in an attempt to make bankruptcy more equitable during the coronavirus pandemic. The CAA allows small business debtors under the SBRA to request a 60-day extension to perform obligations arising under a lease of non-residential property, such as paying rent, if the debtor has experienced a material hardship due to COVID-19. This is in addition to the 60 days already afforded under section 365(d)(3) of the Bankruptcy Code. Debtors may also take 210 days, rather than 120 days, to decide whether to accept or reject non-residential property leases, with the option to extend this deadline by an additional 90 days with the permission of the bankruptcy court.
US Chapter 7 of the Bankruptcy Code
Respond to the questions below, select the Forum link, then click on Create Thread and type in your posting. To respond to a minimum of 2 classmates, first, click on one of their postings, read it, and then select REPLY. Please type your NAME in the Subject field.
- Many small businesses throughout the U.S. have struggled to survive the challenges posed by the novel coronavirus. If a business is overwhelmed by debt, its owners may decide to file for bankruptcy. Do you know of any business or company that closed down or filed bankruptcy because of suffering during the pandemic? Explain by discussing an example and what you learned through this article that must be done when under Bankruptcy?
- The word “bankruptcy” has historically always been associated with something bad or something wrong caused by business mistakes or lack of money. What are benefits you consider as good about business filing for bankruptcy? Discuss why by supporting your answer with an example(s) of how it can work out for a business?
- Under Chapter 7 a creditor committee must monitor the operations of the business and help develop the reorganization plan. The creditor committee process can become costly, since it may involve retaining attorneys and experts to investigate the business. Businesses must always think ahead about how to pay for issues when they arise. If you are a small business owner, how would you pay for the attorney fees and still keep up with taxes and insurance?
US Chapter 7 of the Bankruptcy Code
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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US Chapter 7 of the Bankruptcy Code
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