If you are a Creditor with collateral, you are entitled to receive Adequate Protection so the value of your collateral does not diminish by the Debtor’s continued use during a proceeding. If Adequate Protection is not offered, a Creditor can request the court to lift the Automatic Stay to allow the creditor to recover its collateral.
Both Chapter 13 and Chapter 11 involve plans to rehabilitate a Debtor’s financial circumstance. Chapter 13 pertains to “wage earners” and usually intends to cure mortgage arrearages. Motions for Relief from Stay, Objections to the proposed Plans and Motion to Dismiss or Convert based on lack of feasibility and failure to comply with statutory requirements are the main Creditor tools. Chapter 11s are more sophisticated and require more strategic planning on a Creditor’s part.
Unsecured Creditors may seem to play only a small part in reorganizations but the ability to control votes of an impaired class Creditors offers some leverage to unsecured Creditors in certain cases.
Tom Reilly has represented secured and unsecured Creditors in successfully navigate Chapter 11 and Chapter 13 reorganizations.