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What are Chapters 9, 11, 12 and 15?


Chapter 11 is like a Chapter 13 for rich people and big companies, except that it is more complicated and much more expensive. There are limits to how much debt you can have in a Chapter 13 (roughly $1,000,000 of secured debt and $400,000 of unsecured debt, including income taxes). People who exceed those limits, but either don't qualify for Chapter 7 or have something that they don't want to lose might have to consider Chapter 11. The filing fee alone is roughly $1,200.00. Attorney fees start at $5,000.00 for the simplest of cases, and there are some attorneys who won't touch a Chapter 11 without having $20,000 or more set aside right off the bat. For companies like Enron, the attorney and accountant fees can be in the millions. I try as much as possible to avoid Chapter 11 because most of my clients can't afford it, but I am ready, willing and able to do one if necessary. We are seeing a lot more clients with small businesses and/or with too much debt for Chapter 13, so I believe this will become much more common in the next few years.

Family farmers (and family fishermen) often have assets and debts that would more normally be suited for Chapter 11, but they don't usually have enough resources to pay the fees. This is why Congress created Chapter 12, which is a cross between Chapter 11 and Chapter 13. It gives farmers a way to keep their property and keep their businesses afloat long enough to get back onto their feet, without having to pay the extremely high fees that usually go along with Chapter 11. One of the very few good things about the 2005 amendments to the Bankruptcy Code was that Chapter 12 was made permanent. (It had previously been a temporary measure, which was sometimes available and sometimes not, and often used as a political football.) With so much farmland in this area you would think that Chapter 12 would be fairly common, but there have only been a handful of Chapter 12 cases filed here in the past several years.

Chapter 9, which is even more rare than Chapter 12, is for cities and municipalities. There have only been a few Chapter 9 cases in the entire country since it was first implemented in 1978, but again, there are a lot of cities, towns and counties in financial trouble lately, and there could be a rash of Chapter 9 filings over the next few years.

Chapter 15 is relatively new, having just been created as part of the 2005 amendments to the Bankruptcy Code. It has to do with international issues, and it is very unlikely that we will ever see a Chapter 15 case filed in Tennessee.