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After marathon efforts to renegotiate its debts, Chrysler declared bankruptcy today. Though their reorganizations don't garner massive government or media attention, many small businesses use Chapter 11 in attempts to become viable after tough times. Some small businesses receive different treatment under our bankruptcy procedures. Knowing the differences can factor into an evaluation of whether reorganization through bankruptcy might benefit a small business.
Reuters reports that Chrysler's Chapter 11 filing is the first bankruptcy by a major U.S. automaker. No doubt its reorganization, including an alliance with Fiat, will prove a massive undertaking. In Chapter 11 bankruptcy cases, a creditors' committee (typically the 7 largest unsecured creditors) plays a key role in consulting on the administration of the case, investigating the debtor's operation of the business and participating in the formulation of a reorganization plan.
Because creditors willing to serve on the committee can be harder to find in some small business Chapter 11 cases, the Bankruptcy Code provides special procedures for designated "small business cases."
To qualify as a "small business case":
What are some differences in how "small business cases" are handled?
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.