Chapter 11 is a type of bankruptcy that allows businesses to continue operating while they develop a plan to repay their creditors. In a Chapter 11 bankruptcy, the debtor submits a plan to the court outlining how to repay its debts. If the court approves the plan, the debtor must follow it.
- Who can file for Chapter 11 bankruptcy?
Individuals and businesses can file for Chapter 11 bankruptcy. However, they must meet specific eligibility requirements. For example, individuals must have a regular income and cannot pay their debts as they become due. Businesses must be able to continue operating as a going concern.
- What happens in a Chapter 11 bankruptcy?
Once a debtor files for Chapter 11 bankruptcy, the court appoints a trustee to oversee the case. The trustee manages the debtor’s business operations and ensures that the debtor complies with the bankruptcy plan. The debtor must also provide the court with their assets and debts.
- What are the benefits of filing for Chapter 11 bankruptcy?
There are several benefits to filing for Chapter 11 bankruptcy. These benefits include:
- Protection from creditors: Once a debtor files for bankruptcy, their creditors cannot contact them or take legal action against them to recover their debts.
- A fresh start: Filing for bankruptcy can help a debtor get out of debt and start over.
- The ability to restructure debt: In a Chapter 11 bankruptcy, the debtor may be able to negotiate with creditors to reduce or eliminate certain debts.
- The ability to continue operating the business: In a Chapter 11 bankruptcy, the debtor may be able to continue operating their business while they work to repay their debts.
