Chapter 11 bankruptcy: Proof of Claim question.
1. It sounds like there is no way to prevent *any* corporation from filing
Chapter 11;
2. Fighting about the plan is our main remedy;
3. We probably can't get our property back.
If this is really the way Chapter 11 works, Chapter 11 is a more potent
vehicle for fraud and economic disaster for creditors than Chapter 7 could
ever be. But enough venting. Any comments will be appreciated?
Can't the bankruptcy judge go back to people to whom the agency
has made payments for some period of time prior to the bankruptcy
and order those payments to be returned if they were made to
shelter assets during the bankruptcy?
First, if the bankruptcy is filed less than one year after the conveyance of
the building, the deed to the son is called an "insider preference" and is
voided, causing the building to return to the bankruptcy estate.
Second, a Chapter 11 plan must be carefully drafted so it CAN be approved.
Your client must be treated equally with all other unsecured creditors
unless the judge is convinced that there is a reason to distinguish you.
Third, if your client is one of the seven largest unsecured creditors, you
are entitled to be on the Unsecured Creditors Committee, which has broad
powers over the day-to-day management of the debtor, including the demand
that the court appoint a trustee over it.
Finally, unlike Chapter 13, you have a voice in whether the plan is
approved -- and if no plan is approved 120 days after filing, the right to
propose a plan of your own, which is likely to be distasteful to the debtor.