"What is the benefit for a reputable law firm to even try to initiate a chapter 11 if it is not viable - why not just do a chapter 7 right out of the gate?"
1. Bankruptcy lawyers are often told to file what the client wants and time is often of the essence, AND it is nott up to the lawyers to assess economic viability of an enterprise - they must rely upon the representations of the client.
2. Filing as a Chap 11 doesn't foreclose any options - many Chap 11s convert to Chap 7s - very, very rarely does a case filed as a Chap 7 wind up as a Chap 7. So you'd file with the most options for the client and buy time to see if a Chap 11 reorg plan is even a viable pitch - it takes a lott of time to assess the estate - and experts like accountants, bankers/i-bankers, and business people - and communications with the creditors before you can even know if a plan is potentially viable - and even then you can file a reorg plan with a less than 1 percent chance it will get approved.
3. $$$$ - Hey, you get more billable hours ~OUTT of meetings, review, preparation, etc. for a possible Chap 11 reorg plan, even if then abandoned or rejected, and THEN you get the billable hours for the Chapter 7 work. Why nott gett more money?
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