Protection And There Isn't Much A Creditor Can Do About It.
Q: My research indicates that even a solvent corporation can seek Chapter 11 protection and there isn't much a creditor can do about it, right?
A: 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. The local counsel you are retaining (if he is a bankruptcy specialist) will know all the tricks.