This Chapter is typically used for business entities. A Chapter 11 debtor proposes a plan of reorganization to keep the business alive and pay creditors over time; the plan must be approved by the Court and cannot exceed five years. Chapter 11 is more expensive than Chapter 13, but has no debt limits.
A Chapter 11 bankruptcy is a type of bankruptcy reorganization that is available to both individuals, and business entities such as corporations, limited liability companies and partnerships. Chapter 11 is primarily used by businesses that want or need to keep operating during their reorganization.
The goal of this type of bankruptcy is to file a confirmable Chapter 11 reorganization plan. There are many rules about what makes a plan confirmable. Creditors will get a chance to vote on whether or not the plan should be confirmed. Prior to plan confirmation, Chapter 11s are supervised by the Federal Bankruptcy Court and by the Office of the United States Trustee (UST). The Chapter 11 debtor will be required to pay quarterly trustee fees based on the debtor’s business money distributions during the quarter. Monthly status reports must be filed with the court and with the UST office.
In a typical Chapter 11, the debts of the organization will be restructured to provide payments to the creditors under more favorable terms to the debtor. This allows the company to restructure their debt and still remain a viable business. The length of a loan and interest rate are terms that are negotiable during formulation of a Chapter 11 plan.
Chapter 11 bankruptcy is extremely complicated and should not be attempted without the assistance of a highly experienced bankruptcy attorney. Chapter 11s are very expensive, but the value you receive in return can be exceptional when you have our experience on your side. Call (417) 4NO-DEBT to see how we can help.
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