Information for Debtors
Chapter 11 bankruptcy, or reorganization, is typically filed by business entities that need an opportunity to reorganize their finances. Businesses that file for Chapter 11 bankruptcy generally continue to function and do not have to sell any assets or property. The goal of Chapter 11 bankruptcy is for the business to implement a confirmed plan to repay the creditors. Once the plan is confirmed, it serves as a discharge and both the creditors and debtor must abide by the new plan.
Please note that at times an unsecured creditors committee is formed in the case. These creditors may then be able to investigate the debtor’s business practices and participate in developing the repayment plan. Certain debts under Section 523 of the Bankruptcy Code are non-dischargeable, and in these cases, the creditors retain the right to collect on the debt.