Chapter 11 of the Bankruptcy Code generally provides for reorganization—usually of a corporation or partnership. A chapter 11 debtor (bankrupt entity) usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in a chapter 11 bankruptcy filing.
In Connecticut, as in all states, Chapter 11 of the Bankruptcy Code allows businesses, including corporations and partnerships, to reorganize their debts in order to continue operating while repaying creditors over a period of time. This federal law is designed to enable financially distressed businesses to restructure their obligations and potentially return to profitability under a court-approved plan of reorganization. While Chapter 11 is most commonly associated with larger corporate entities, it is also available to small businesses and individuals who engage in business activities. The debtor typically proposes a reorganization plan that must be accepted by creditors and approved by the bankruptcy court. This process can be complex and often requires the guidance of an attorney with expertise in bankruptcy law.