Frequently Asked Questions About Chapter 11 Bankruptcy
- What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy proceedings are reorganization plans intended for large corporations, small businesses, and—in a few rare cases—qualified individuals. The business will continue to operate during the restructuring or reorganization phase of a Chapter 11 bankruptcy proceeding. Once a Chapter 11 Plan is confirmed, the case can be closed, and the newly restructured business moves forward with a new lease on life.
- How long can I stay in Chapter 11 bankruptcy?
Chapter 11 does not have a cap on the number of years it can be in place. Depending on the circumstances, a Chapter 11 Plan can last from 5 years to 30 years. It depends on the amount of secured debts, the votes of creditors of a proposed plan, what property the business needs to retain and pay for, etc. However, once the Chapter 11 Plan is confirmed, the case can be administratively closed. When the Plan is completed, the case is reopened, and the final Order is entered.
- What happens when a company files Chapter 11 bankruptcy?
Chapter 11 bankruptcy proceedings are commonly known as restructuring or reorganization plans. Typically used by corporations and large companies, Chapter 11 allows the filing business to stay open and operational while they restructure their assets and debts. This allows the organization to repay their creditors over time. This represents a contrast to Chapter 7 bankruptcy, in which company assets are sold to pay creditors.