Nonprofits & Chapter 11

Nonprofit organizations struggle with debt just as businesses do. Fortunately, Chapter 11 bankruptcy has many advantages for nonprofits seeking to discharge both secured and unsecured debt.

At the Orantes Law Firm in Los Angeles, our attorneys are dedicated to helping nonprofit organizations throughout Southern California obtain relief from debts. We offer a free initial consultation to look at the tax debt problems you face and give you honest answers about your rights and options.

Advantages of Chapter 11 Bankruptcy for Nonprofits

Unlike businesses, nonprofit organizations do not have shareholders. This means that nonprofits are not subject to the absolute priority rule, which makes it harder to discharge debts.

For example, our firm represented a church that was in danger of losing its place of worship. The building and property were valued at $2.5 million, and the church was unable to keep up payments. By filing Chapter 11 bankruptcy, the church was able to bring down the value of its property to the current market value of $1 million. It was also able to pay its arrearages over a five-year period without interest or penalties. As a result, the church was able to maintain ownership of its property. 

Because the rules of discharging unsecured and secured debts in Chapter 11 bankruptcy are complex, it’s important to consult an experienced lawyer before you file bankruptcy.

Contact Our Los Angeles Chapter 11 Bankruptcy Attorneys

For more information about discharging taxes in Chapter 11 bankruptcy, call (213) 340-0534 or contact us by e-mail to schedule a free initial consultation. Se habla español.