Chapter 11 Bankruptcy
Unlike Chapter 7 Bankruptcy which liquidates the debtors non-exempt assets, Chapter 11 Bankruptcy allows the Debtor (which is generally a corporation or partnership) to restructure their debt obligations and continue to operate their business (although the business is supervised by the bankruptcy court and should be managed and operated for the benefit of the creditors).
Chapter 11 Bankruptcy
Chapter 11 Bankruptcy is generally used by corporations and large businesses who need to restructure their debt to continue their business operations. A trustee is generally not appointed unless the debtor's ability to manage their business is considered ineffectual or dishonest. A plan of reorganization is established and reviewed by a committee of creditors' which can be composed of the top unsecured creditors who are appointed by the by the United States Trustee. This committee will provide oversight for the business and help the business develop a debt reorganization plan which is acceptable to the committee and the business.
If an agreeable plan of reorganization can not be established the business may have the opportunity to confirm the plan despite opposition from the committee, but they must first pass certain statutory tests. The reorganization plan outlines how the businesses debts will be repaid and reorganized to operate a profitable business.
Although individuals are allowed to file Chapter 11 Bankruptcy most choose to Chapter 13 Bankruptcy which is generally less expensive. Chapter 11 Bankruptcy can be complicated, and if not done properly, has a very low success rate. It is important to seek the legal advice of a bankruptcy attorney for more information about Chapter 11 Bankruptcy.
More Help on Chapter 11 Bankruptcy
- Chapter 13 Bankruptcy - Chapter 13 Bankruptcy allows the debtor to create a 3 or 5 year bankruptcy repayment plan to restructure their debt payments. - read more
- Chapter 7 Bankruptcy - Chapter 7 Bankruptcy is a liquidation or \"straight\" bankruptcy. It is the quickest, easiest and least expensive type of bankruptcy method to discharge debts. - read more
- Debtor - A debtor is an entity or person who owes a debt or a service to another person or entity which can also be called a Creditor. - read more
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