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 Delaware, as in other states, Chapter 11 of the Bankruptcy Code allows for the reorganization of a debtor's business affairs, debts, and assets. This is typically used by corporations, partnerships, and in some cases, individuals with substantial debts and assets. The process involves the debtor proposing a plan of reorganization to maintain business operations while paying creditors over a period of time. The plan must be accepted by the creditors and approved by the bankruptcy court. Chapter 11 provides the debtor with a fresh start, subject to the debtor's fulfillment of its obligations under the reorganization plan. Delaware, being home to many corporations due to its business-friendly laws, often sees a significant number of Chapter 11 filings. The state's bankruptcy court, the United States Bankruptcy Court for the District of Delaware, is well-versed in handling complex Chapter 11 cases.