Generally any “person” eligible to be a debtor under Chapter 7 may be a Chapter 11 debtor, and the term “person” includes individuals, partnerships and corporations. Under Chapter 11, a debtor ordinarily continues business operations while reorganizing its financial affairs. Reorganization is achieved by way of a written plan of reorganization approved by the court pursuant to the plan “confirmation” process. Through a confirmed reorganization plan, the debtor can restructure its obligations to creditors and pay those obligations over time.
By permitting reorganization, Congress anticipated that the person/business would continue to provide jobs, to satisfy creditors’ claims, and to produce a return for the debtor. Congress presumed that the assets of the debtor would be more valuable if used in a rehabilitated business/person than is sold for scrap value.
As always, there are a number of qualifying factors and administrative hurdles that require the expertise of a competent bankruptcy attorney. Chapter 11 bankruptcies are extremely complex proceedings, and representation form a skilled bankruptcy attorney, like those at Legal Objective, can be the difference between financial success or further failure.