After a Chapter 11 plan is confirmed by the court, the plan must be implemented and carried out, either by the debtor or by the successor to the debtor under the plan. If the plan calls for the debtor to be reorganized or for a new corporation to be formed, this function must be carried out first.

What happens during a Chapter 11 filing?

A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.

How long do Chapter 11 proceedings take?

While the average length of a Chapter 11 Bankruptcy case can last 17 months, larger and more complex cases can take up to five years. And following the conclusion of the bankruptcy case, it can still take months for Debtors to begin distributing payouts to the highest priority class of Creditors.

What is a Chapter 11 plan of liquidation?

A Chapter 11 debtor may continue to operate the business after the petition date, preserving the assets as well as value. In a liquidating plan, instead of proposing ongoing payments to creditors, the Debtor provides for the sale of “all or substantially all” of its assets.

How does a Chapter 11 bankruptcy plan work?

A Chapter 11 bankruptcy can be likened to a very contentious election. Each class of creditors (priority, secured, and unsecured) are entitled to vote to accept or reject your proposed treatment of them in your bankruptcy plan. After the initial hearings, the court will authorize you to start soliciting votes.

When does a debtor receive a Chapter 11 discharge?

In the Chapter 11 case filed by a corporation, limited liability company, or other nonindividual, the debtor receives a discharge when a plan is confirmed by the court. The order of the court that confirms the plan also contains the debtor’s Chapter 11 discharge.

When does an individual file for Chapter 11?

Typical Chapter 11 Cases Filed by Individuals. Chapter 11 cases are seldom filed by individuals. However, when individuals do file for Chapter 11, it’s usually for one of two reasons: real estate investment reorganization or reorganizing unsecured debts that are too high to qualify for Chapter 13 relief.

What’s the difference between Chapter 11 and Chapter 13?

Unlike a chapter 13 trustee, the U.S. trustee primarily reviews, and the debtor typically will not receive the same sort of guidance that many chapter 13 trustees provide in plan formulation and terms, analysis of required payments, etc.