Chapter 11 reorganization is a type of bankruptcy available to individuals and business entities such as partnerships, limited liability companies (“LLCs”) and corporations.
Unlike Chapter 13 it has no limits on the amount of debt and it is highly flexible. Chapter 11 is also very complex. During the reorganization process, debtors usually remain in control of their own financial affairs. During this period of time they are called a “Debtor-in-Possession”.
Chapter 11 bankruptcies require a lot of documentation, including a comprehensive 7 day package; monthly operating reports, meeting with the United States trustees; motions for employment of attorneys; accountants, appraisers of real and personal property, and others as required by the client’s goals, the court or the U.S. trustee.
There are several more court appearances than in Chapter 7 or 13 bankruptcies. Chapter 11 bankruptcy include the Disclosure Statement, which tells creditors what the Plan of Reorganization is going to be about and, of course, there is the Plan of Reorganization.
The Plan process is complex and requires Court and creditor approval – although the bankruptcy court can overrule creditors and approve the Plan even if the creditors vote against it.
Our office goes through every step, step by step with our clients with the goal being approval of the Plan of Reorganization. Plan approval is at best difficult and is not always accomplished, but it is our goal to do our utmost to obtain plan approval for our Chapter 11 clients.
There is much to be said about Chapter 11 bankruptcy, however, for purposes of this document, the above should be sufficient.