Chapter 11 bankruptcy, or the production of a plan to allow a business to reorganize for the purpose of paying off its creditors, is often a better option for businesses experiencing difficulties than liquidation because it produces higher revenue overall than the immediate sale of all assets.
A business that has declared Chapter 11 bankruptcy has a complicated task ahead. It must produce a comprehensive list of both its assets and debts, which is made available to creditors. A plan of repayment must be created and then voted on by the creditors. If both the list and plan are approved by the court, the bankruptcy is confirmed and the plan must be carried out.
Chapter 11 bankruptcy can often be a difficult process, and there are many finer details including restrictions on the functions of the business, potential mismanagement, and details of further actions open to the business. For anyone considering filing for bankruptcy, it is advisable to contact a lawyer for detailed advice.
About the Author: An Associate at Rosen & Associates, P.C., Nancy L. Kourland specializes in the representation of both debtors and creditors in Chapter 11 cases. Nancy L. Kourland has an extensive background in in-depth legal research as well as all practical aspects of Chapter 11 cases.