Chapter 11

Chapter 11, also called "Reorganization," ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization. Unlike Chapter 7, where a liquidation of all assets takes place and the business ceases to function, Chapter 11 allows a business to continue to operate while its debts are reorganized to allow the business an opportunity to return to profitability. The Chapter 11 debtor normally files a plan of reorganization within the first 120 days after the order for relief is issued and provides creditors with a disclosure statement containing information adequate to enable creditors to evaluate the reorganization plan. Certain “fast track” rules apply to “small businesses” as defined by the bankruptcy code which can accelerate the process.



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