Chapter 11 is a reorganization bankruptcy case used by large businesses and corporations. It is also available to specific individuals. Chapter 11 allows debtors to retain their assets and remain in business while restructuring their debt. The debtor restructures their debts into a plan instead of closing and liquidating assets to pay creditors.
A Single Asset Real Estate (SARE) Chapter 11 is a special type of Chapter 11 case. Our New Bedford bankruptcy attorneys discuss key considerations of a SARE Chapter 11 in this blog.
What Is a Single Asset Real Estate Chapter 11 Case?
The United States Bankruptcy Code states the qualifications for a single asset real estate (SARE) debtor for Chapter 11 in 11 U.S.C. §101(51B). A SARE debtor is:
- A debtor other than a family farmer;
- With a single project or property, other than residential real estate with less than four residential units;
- That produces substantially all of the debtor’s gross income; but,
- The debtor does not conduct substantial business on the property other than operating the real estate and related activities.
Numerous types of properties can qualify for a single asset real estate Chapter 11, including office buildings, shopping malls, apartment complexes, and warehouses. SARE Chapter 11 cases offer many benefits for specific debtors who meet the qualifications to file as a SARE debtor. However, there are some considerations that debtors should discuss with their bankruptcy before proceeding.
Key Considerations for Single Asset Real Estate Chapter 11 Cases
Special rules govern SARE Chapter 11 cases. A SARE debtor may or may not find this type of Chapter 11 case beneficial.
Things to consider that could impact your decision whether to file as a single asset real estate debtor include:
- The automatic stay is limited and may not remain in effect throughout your Chapter 11 case.
- A single-asset real estate debtor cannot file for a small business bankruptcy or Subchapter V bankruptcy.
- A debtor is designated as a SARE debtor in Chapter 11 by self-designating on the Chapter 11 petition or by motion, OR a secured creditor petitions the bankruptcy court for a determination of SARE status.
- Creditors can file to lift the automatic stay if you do not file a feasible plan of reorganization or make interest payments within 90 days of filing OR within 30 days of the court determination of a signal asset real estate case.
Because of the short deadlines to file a feasible plan of reorganization or begin making payments, a single asset real estate Chapter 11 might not be in your best interest. However, avoiding the designation could be challenging.
An experienced New Bedford Chapter 11 bankruptcy lawyer can discuss strategies that could make a SARE Chapter 11 casework. The attorney may also discuss alternatives to filing Chapter 11.
Contact Our New Bedford Bankruptcy for More Information About Chapter 11 Cases
Chapter 11 bankruptcies are more complex than other bankruptcy chapters. However, Chapter 11 can be extremely helpful for some debtors. If you want more information about Chapter 11, call Logan A. Weinkauf, P.C., to discuss your situation with an experienced New Bedford bankruptcy lawyer.