Can Chapter 11 Be Denied?
Yes, Chapter 11 bankruptcy can be denied under certain circumstances. Here are some key reasons why a Chapter 11 filing may be denied:
- Filing Bankruptcy Petitions Too Close Together: If a business owner filed a Chapter 11 bankruptcy petition that was dismissed within the preceding 180 days, they cannot file another Chapter 11 bankruptcy petition. 12
- Failure to Attend Credit Counseling: Business owners must receive credit counseling from an approved credit counseling agency within 180 days before filing for Chapter 11 bankruptcy. Failure to do so can result in the denial of the Chapter 11 petition. 12
- Committing Fraud: If the debtor or business owner commits fraud, such as concealing assets, avoiding payments to creditors, or falsifying business or financial information, the court can deny the Chapter 11 bankruptcy filing. 12
- Ineligibility: Certain entities are ineligible to file for Chapter 11 bankruptcy, including governmental agencies, estates, nonbusiness trusts, stockbrokers, commodity brokers, insurance companies, banks, and Small Business Administration (SBA) licensed small business investment companies. 35
- Previous Bankruptcy Case Dismissal: Individuals or businesses cannot file for Chapter 11 bankruptcy if they have had another bankruptcy case dismissed within the previous 180 days. 35