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 Bankruptcy involve Plans to rehabilitate a Debtor’s financial circumstances. Chapter 13 pertains to “wage earners” and usually intends to cure mortgage arrearages. The main Creditor tools are filing Motions for Relief from Stay, Objections to the proposed Plans and Motions to Dismiss or Convert, based on lack of feasibility and failure to comply with statutory requirements. A Chapter 11 Bankruptcy filing is more sophisticated and requires more strategic planning on behalf of a Creditor.
Unsecured Creditors may seem to play only a small part in Bankruptcy Reorganizations but the ability to control votes of an impaired class of Creditors frequently offers some leverage to unsecured Creditors.
Attorney Tom Reilly has represented both secured and unsecured Creditors in successfully navigated Chapter 11 and Chapter 13 reorganizations.