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Chapter 11 Bankruptcy is a reorganization procedure used by businesses, including sole proprietors, partnerships, and corporations. The debtor in chapter 11 files a petition which includes a list of assets and liabilities, and a detailed statement of financial affairs. The debtor will typically act as his own trustee, called a "debtor in possession", and will remain in possession of all estate property. The court can appoint a trustee for cause shown, including mismanagement.

The Debtor

About one month after the filing, the debtor and his attorney attend a meeting of creditors. The debtor files monthly operating reports, showing income and disbursements, profit and loss, and a balance sheet, and pays quarterly fees to the U.S. Trustee based on the amount of money disbursed.

The debtor has the exclusive right to file a plan during the first 4 months. Thereafter, creditors are permitted to file plans. The Chapter 11 plan is accompanied by a disclosure statement, which describes the debtor’s financial circumstances, including:

  • Prior History and cause of the Filing
  • Assets and liabilities
  • Income and expenses
  • Treatment of creditors
  • Liquidation analysis
  • Projections of earnings
  • Tax consequences
  • Discussion of options
Link to more information:

Bankruptcy Basice, US Bankruptcy Court 


 


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