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If the lessor has a UCC1 statement filed with the State and the lease contract permits the lessor to repossess the equipment upon payment default, then it is legally possible for the lessor to repossess without legal action. The caveat is that any repossession must be accomplished without causing a "breach of the peace," which basically means that if there is a confrontation between lessor and lessee, and law enforcement is called, then everyone gets arrested and the repossession is terminated.
For this reason, most equiplment repossession include a "claim and delivery" lawsuit where the lessor proves the right to the equipment, and the court orders the sheriff to repossess or disable the equipment until the main lawsuit for breach of lease is finished, and a final judgment for possession of the equipment is entered by the court.
Thus, the answer here is "yes," but dependent upon a lot of unknowns.
Re Chapter 11, you can reduce your payments to unsecured creditors in order to make your payments to the lessor, so this can help your cash flow issues. The risk is that the unsecured creditors refuse to to any further business with you -- so, for example, a printing press isn't worth a heck of a lot if you can't purchase paper or ink. But, most creditors want to make the Chapter 11 work, because if it doesn't then the unsecured creditors get nothing -- so, generally, the Chapter 11 may help your circumstance.
Except for one thing...Chapter 11 is expensive. The administrative fees can easily run $25,000 per year. So, you may not be able to afford the expense, in which case, your only other option is to try to negotiate with your unsecured creditors so that you can maintain the lease payments.
However, you may want to sit down with a local business bankruptcy attorney and discuss the costs of Chapter 11, before you write it off your list of possibilities. For a referral, see: http://www.abanet.org/legalservices/lris/directory/main.cfm?id=CA and www.martindale.com. Most bankruptcy lawyers only do consumer bankruptcies, so make sure that whomever you talk to has experience with Chapter 11, because it's a totally different bag-o-worms.
Hope this helps.
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There may be something in the lease contract itself that would permit you to renegotiate, but without reading the entire thing, I couldn't do more than speculate. Chapter 11 is pretty much the only way to force the lessor to come to the table. Of course, notice of Chapter 11 might give you some negotiating leverage, but I wouldn't give the lessor any warning of your potential insolvency, unless you were current on the lease, because the lessor may try to strike first before you file Chapter 11, and repossess the equipment.
I wish you the best.
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