The bankruptcy laws provide for Chapter 11 bankruptcy, which is used primarily to rehabilitate a business debtor. Chapter 11 allows a debtor to enter into an agreement with creditors under which all or a part of the business continues. The debts of the business are restructured so as to allow the debtor to continue his business operation and make payments based on a plan of reorganization.
Chapter 11 is more complex than Chapter 12 or Chapter 13, but it may provide an option for those farm operators or individuals whose debts exceed the limits imposed by Chapters 12 and 13. Its provisions are quite complicated, and any decision to file a Chapter 11 petition should be reviewed and planned out with an attorney extensively before filing.
What Can You Expect During Your Chapter 11 Bankruptcy?
A. The objective in a Chapter 11 case is to adjust and reorganize a debtor's obligations so as to allow the business to continue.
B. To initiate a Chapter 11 case, a voluntary petition is filed with the court. A schedule of assets and liabilities and a statement of financial affairs also must be filed.
C. In most cases, the debtor - known as the “debtor in possession” once the case has begun - remains in possession of his property, develops a plan, and generates funds to pay his debts.
D. Generally, a trustee is not assigned to the case unless there is evidence of fraud or mismanagement.
E. A committee of creditors will generally be appointed to oversee the business operation under the supervision of the debtor in possession once the case has been initiated.