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February 16, 2010

Chapter 11

Filed under: — Barry @ 6:24 pm

Chapter 11 is known as Reorganization.  It is usually for businesses that want to continue operating the business and repay creditors while through a court-approved plan of reorganization. Rarely individuals may file Chapter 11.  This happens when the debtors do not qualify for Chapter 13.

The Chapter 11 debtor usually has the exclusive right to file a plan of reorganization for the first 120 days after it files the case and must give creditors a disclosure statement containing information adequate to enable creditors to evaluate the plan. Ultimately the judge approves (confirms) or disapproves the plan of reorganization.

Under the confirmed plan, the debtor can reduce its debts by repaying some of its obligations and discharging others. The debtor can also end burdensome contracts and leases, recover assets, and change the size of its operations to return to profitability.

Under Chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.  Recent examples of Chapter 11 bankruptcies  are General Motors and Chrysler Motors.

This law office does not handle Chapter 11 bankruptcies.

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