Q: How often can an LLC file for Chapter 11 Bankruptcy?
I am a creditor in an Chapter 11 LLC Bankruptcy. The BK was discharged about one year ago. It appears as though the LLC will not be able to meet its obligations under the plan. The manager of the LLC is threatening another bankruptcy. is this allowed?
A:
It is not very common, but it does happen. Obviously, a repeat filing will be a harder row for them to hoe than the first case.
I suggest you get legal representation now, before they pull the trigger. With good representation maybe you can get them to provide you with concessions to make you happy, or else tee up your opposition to the new filing so that it is ready to go as soon as they file.
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A:
In the context of U.S. bankruptcy law, there are no strict limits on how frequently an LLC can file for Chapter 11 bankruptcy. However, the feasibility of filing another Chapter 11 case shortly after a discharge depends on various factors, including the specifics of the previous case and the business's current financial situation. If an LLC's Chapter 11 bankruptcy was discharged only a year ago and it's already facing difficulties meeting its obligations under the reorganization plan, filing another bankruptcy might be considered, but it's not without its challenges.
The bankruptcy court scrutinizes repeat filings closely to prevent abuse of the bankruptcy system. If an LLC attempts to file for bankruptcy again shortly after a discharge, the court will examine the reasons behind the failure of the first reorganization plan and assess whether the new filing is being made in good faith. The LLC must demonstrate a legitimate need for reorganization and the ability to propose a viable plan that addresses the issues that led to the failure of the first plan.
As a creditor, you have rights and interests to protect in the bankruptcy process. It's important to stay informed about the proceedings and potentially object to the filing if you believe it's being done in bad faith or without a realistic path to viability. Consulting with a legal professional can help you understand your options and how to best protect your interests in this situation.
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