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 that outlines how it will 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, there are certain eligibility requirements that must be met. For example, individuals must have a regular income and be unable to 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 bankruptcy case. The trustee is responsible for overseeing the debtor’s business operations and ensuring that the debtor complies with the bankruptcy plan. The debtor is also required to provide a list of their assets and debts to the court.
- 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 are prohibited from contacting them or taking any legal action against them to collect 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.