Facing seemingly insurmountable debt can be stressful for any business. Bankruptcy may seem like a taxing and grim process at first glance, but it may the most viable solution for your company. At Stok Folk + Kon, our bankruptcy attorneys show clients in Fort Lauderdale and other nearby areas how this process can be used to rehabilitate their businesses. Our legal team is experienced in helping companies through bankruptcy, including assessing the strengths and weaknesses of creditor claims.The Claim Objection Process
Once a debtor files for bankruptcy, all affected creditors are notified. Once notified, creditors can then file what is called a proof of claim with the bankruptcy court. The proof of claim is a document officially stating that the debtor owes money to the creditor. Once the proof of claim is filed with the court, the debtor, or any affected party, such as the bankruptcy trustee, can file an objection to the claim. The objection simply states that the debtor or whomever files the objection has reason to believe that the creditor is not owed the amount of money stated in the proof of claim.
Objecting to a claim is particularly important for the debtor. If the debtor fails to object to a claim, then the claim remains by default and the debtor will be responsible for satisfying the claim out of the proceeds of the debtor’s estate. Conversely, if the creditor does not reply to the objection, then the claim is disallowed, and the creditor receives no compensation, even though it may have a valid claim.
There are a number of reasons that a debtor or other interested party may file a claim objection: the objecting party believes that the claim amount is incorrect, for instance. The debtor could also claim it has no record of debt to the creditor or that it has already satisfied that particular debt. Debtors may also file what is called an Omnibus Objection. This type of objection is useful when there are multiple claims and the debtor desires to object to all claims on the same grounds. In other words, this allows the debtor to file a single Omnibus Objection versus having to file individual objections to each claim.
Once the objection to the claim is filed and the creditor has responded to the objection, a hearing will be held before a bankruptcy judge to determine whether the claim is valid. A notice of the hearing is usually sent out to the involved parties at least 30 days prior to the hearing date. The creditor will have the burden of proving that the claim is valid and that it is legitimately owed money by the debtor. The standard at the hearing is a preponderance of the evidence—the creditor must prove that it is more likely than not that the debtor has an outstanding debt to the creditor that has not been satisfied. After hearing argument from both sides, a bankruptcy judge can disallow the claim, overrule the objection and allow the claim to remain, or allow the claim, but modify it in some way.Fort Lauderdale Lawyers Helping Businesses Resolve Debt Disputes
In bankruptcy court, both filing and objecting to claims can be a complicated process. Whether you are a business in bankruptcy or a creditor, the Fort Lauderdale lawyers at Stok Folk + Kon can evaluate your case, answer your questions, and review strategies that may help in the debt resolution process. We proudly serve South Florida clients in communities including Fort Lauderdale and Hollywood. Call us today at (954) 237-1777 or contact us to schedule a consultation.