Chapter 11 Bankruptcy is commonly referred to as bankruptcy reorganization and exclusivity refers to a debtor's exclusive right in Chapter 11 Bankruptcy to file a bankruptcy plan of reorganization within a specified time period.
After the exclusivity period ends, unless it is extended by the bankruptcy court, other parties may file their own Chapter 11 Bankruptcy reorganization plans. Debtors (with the exception of small business debtors) who are filing Chapter 11 Bankruptcy have an exclusive right to create and submit a reorganization plan for a 120 day period (11 U.S.C. § 1121(b)). The Bankruptcy Court, under certain circumstances, may decide to extend the exclusivity period up to a maximum of 18 months.
At the end of the exclusivity period other creditors or the Trustee (not the United States trustee) may also submit a Chapter 11 reorganization plan. The goal of allowing the creditors to submit their own bankruptcy reorganization plan is to give the debtors an incentive to resolve the bankruptcy case in a timely manner. Chapter 11 Bankruptcy cases for small businesses may be completed faster than bankruptcies for larger corporations. The exclusivity period for small businesses to file their Chapter 11 bankruptcy reorganization plan is 180 days (11 U.S.C. § 1121(e)). This period, however, may be extended by the bankruptcy court up to a maximum of 300 days, but only if it is clear a plan will be completed and accepted within a reasonable time period.
More Help on Exclusivity
- Bankruptcy Court - United States federal courts have jurisdiction over all bankruptcy cases and the cases are not allowed to be filed in state court. - read more
- 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). - read more
- Trustee - The bankruptcy trustee program, created by the United States Department of Justice, manages and oversees the bankruptcy process to improve efficiency and guarantee the integrity of the bankruptcy system. - read more