Can a not-for-profit organization file for Chapter 11 bankruptcy in New York State?

Asked on June 15, 2009 under Bankruptcy Law, New York


David Hamilton / Dwyer & Associates

Answered 11 years ago | Contributor

The answer to this question hinges largely on the way that the entity is organized and the nature of its operations. In general, here in New York- yes.

Section 109 of the Bankruptcy Code dictates the eligibility requirements for a bankruptcy filing under any chapter of the Bankruptcy Code. Initially, it provides that "only a person that resides in or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under [title 11.]" The statute expressly makes certain entities ineligible for certain kinds of bankruptcy relief, including railroads (which can only file for chapter 11), domestic insurance companies, banks, and savings and loan associations, all of which are subject to different legislative schemes enacted to effect their reorganization or dissolution. The Bankruptcy Code defines "person" to include any individual, partnership or corporation. Not-for-profit corporations qualifying for that status under applicable state law are eligible to file under both chapter 7 and chapter 11 of the Bankruptcy Code. Even unincorporated non-profit enterprises may qualify. However, if a not-for-profit enterprise is not organized as either a corporation or a "business trust" within the meaning of Bankruptcy Code section 101(9), it will not be eligible for relief under the Bankruptcy Code.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.