What is Chapter 9 Bankruptcy?

Ch 9 Utah BK Lawyer

Chapter 9 bankruptcy is a type of bankruptcy available to municipalities, such as cities, towns, and counties, that are experiencing financial distress. It allows these entities to reorganize their debts, typically with the goal of remaining in operation and continuing to provide services to their constituents.

Chapter 9 bankruptcy is similar in many ways to Chapter 11 bankruptcy, which is used by businesses and individuals to reorganize their debts. However, Chapter 9 has some unique features, such as the requirement that the municipality must obtain approval from the state government in order to file for bankruptcy.

In order to file for Chapter 9 bankruptcy, a municipality must meet certain criteria, such as being insolvent and having a plan to adjust its debts that is feasible and in the best interests of its creditors.

Chapter 9 bankruptcy has been used by a number of municipalities over the years. Notable examples include the City of Detroit, which filed for Chapter 9 bankruptcy in 2013, and the City of Stockton, California, which filed for Chapter 9 bankruptcy in 2012. However, it’s worth noting that Chapter 9 bankruptcies are relatively rare compared to other types of bankruptcies, and that most municipalities prefer to avoid bankruptcy if at all possible.

Choose an experienced local Utah attorney when seeking to file in Utah. Contact us to see if bankruptcy is your best option.

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