Adversary demanding 100% of bonus for 5 years!!

[despritfreya]

wow!

Hub,

Why "wow"? In dealing with 11's, it just seems obvious to me. Either OP's attny is not versed in individual 11's or there is something else to this.

If OP had a way to buy back non-exempt property and OP's debts were not primarily consumer debts then a 7 would have been the way to go. The issue of non-exempt property, to me, does not appear to be the determining factor. There must be something else. Maybe there were preferential payments or other recoverable transfers. Certainly, staying in an 11 for over 1 year and being no closer to a confirmed plan than OP was on day one is telling.

Des.

[AngelinaCatHub]

hold on a minute. What do you mean when you state you did not qualify for a 7? 90% of your debt is not consumer debt (deficiency claim on the commercial building). You are a "non-consumer"/"business" case. You do not have to "qualify" for a 7 and, with a rare, rare exception, your high income is not relevant. So, what was the real reason for the 11? My guess is that you do not want a chapter 7 trustee meddling in your affairs. The fact that you can dip into a 401k to buy back assets existed the day before you filed so there must be some other reason.

In the chapter 11 you are required to pay 5 years of projected disposable income. If you historically were receiving large bonuses then a creditor can demand that be taken into consideration in determining your projected disposable income. If your employer is no longer giving such bonuses then, i suppose, your disclosure statement should state so and attach an affidavit from the employer that bonuses have been cut. Alternatively, i am sure you could formulate a plan that provides for the disbursement of the bonuses to creditors if and when you receive them. Where there is a will there is a way and chapter 11's are very flexible. Just sounds like you want to pay as little as possible which, if there were no creditors objecting, would not be an issue. But your largest creditor is going to make sure you pay what you can afford to pay, as is its right. You need to sit down with your attorney and figure this out or, if your attorney is not well versed in chapter 11 cases, find another one.

Des.

wow!

[despritfreya]

HOLD ON A MINUTE. What do you mean when you state you did not qualify for a 7? 90% of your debt is not consumer debt (deficiency claim on the commercial building). You are a "non-consumer"/"business" case. You do not have to "qualify" for a 7 and, with a rare, rare exception, your high income is not relevant. So, what was the real reason for the 11? My guess is that you do not want a Chapter 7 Trustee meddling in your affairs. The fact that you can dip into a 401k to buy back assets existed the day before you filed so there must be some other reason.

In the Chapter 11 you are required to pay 5 years of projected disposable income. If you historically were receiving large bonuses then a creditor can demand that be taken into consideration in determining your projected disposable income. If your employer is no longer giving such bonuses then, I suppose, your Disclosure Statement should state so and attach an affidavit from the employer that bonuses have been cut. Alternatively, I am sure you could formulate a Plan that provides for the disbursement of the bonuses to creditors if and when you receive them. Where there is a will there is a way and Chapter 11's are very flexible. Just sounds like you want to pay as little as possible which, if there were no creditors objecting, would not be an issue. But your largest creditor is going to make sure you pay what you can afford to pay, as is its right. You need to sit down with your attorney and figure this out or, if your attorney is not well versed in Chapter 11 cases, find another one.

Des.

[lrprn]

Unfortunately 99.9% of our forum members have no experience with Ch 11 or converting to Ch 7 after filing Ch 11. Perhaps one of our bk lawyer members or one of our "legally experienced" forum moderators might have thoughts to share with you?

[narf]

Typo corrected - filed in July 2010.

[narf]

- warning - long, complicated story ahead -

I filed an individual Chapter 11 in July 2011. I have a large income and did not qualify for 7; I have large debts and did not qualify for 13, so that's how I came to a Chapter 11 filing. The main debt (90% of total) was a mortgage on a piece of commercial real estate, the mortgage holder filed and received a judgment, which pushed me into BK, then sold the mortgage. This took up the first year of BK. The new mortgage holder retained an attorney, and it looks like they will insist on a plan that assumes my full bonus will be paid out for 5 years. In the past, my bonus has been a large amount of my salary (25%) but in this economy, I don't expect this to continue and don't want a plan that could fail in 3 months if bonuses are less than the past or absent.

My attorney thinks I can appeal to the UST to convert to a 7 if the negotiations fail or founder, based on his experience. The negotiations will be hugely expensive.

I think a 7 would be way less costly than the 11 based on discussions so far. I am fortunate to have a rather large 401K and could pay off the value of my non-exempt assets (mainly 50% of equity in home that I co-own with my spouse) with 401k funds if Chp 7 conversion was agreed.

Any advice on probability of converting? Any obvious loopholes/strategies missing here? I just want to find a plan to start working my way out of this limbo!!

Thanks in advance.