Generally, businesses have around 120 days after filing Chapter 11 bankruptcy to complete a bankruptcy reorganization plan, and another 60 days after that to have their plan approved by the court.
While businesses are developing a reorganization plan, they are protected by an automatic stay, which protects their company from collection activities, like lawsuits, bank levies, foreclosures and repossessions. In addition, businesses can continue to operate as normal while crafting their reorganization plan, and may be able to defer installment payments, including rent.
In some cases, businesses can receive an extension if they need more time to create their plan. Recently, Westinghouse Electric Co., which has filed Chapter 11, requested an additional three months to finish ironing out the details of their reorganization plan. Westinghouse, a nuclear technology firm, does business with over half of the world’s nuclear power plants. As such, the company needs more time to create a reorganization plan that encompasses their 37,000 creditors and thousands of vendors.
Should I Have a Bankruptcy Lawyer Handle My Reorganization Plan?
As bankruptcy attorney Gary Mason talks about in the following video, while he handles business and bankruptcy litigation on a regular basis, for his clients, it is often a brand new experience. Therefore, having an experienced lawyer to guide them through the bankruptcy process is crucial, because it can help them avoid pitfalls that could derail their case.