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 Indiana, as in all states, Chapter 11 of the Bankruptcy Code allows for the reorganization of a debtor's business affairs, debts, and assets. It is typically utilized by corporations and partnerships, but it is also available to individuals who have substantial debts and assets that exceed the limits of other bankruptcy chapters. Under Chapter 11, a debtor usually proposes a plan of reorganization to maintain business operations and pay creditors over a period of time. The process involves negotiation with creditors to alter the terms of debts, such as interest rates or payment schedules, and can also include the sale of certain assets to pay down debt. The goal is to restructure the business in a way that it can become profitable again while ensuring fair treatment of creditors. The U.S. Bankruptcy Court for the Southern District of Indiana and the U.S. Bankruptcy Court for the Northern District of Indiana oversee Chapter 11 cases filed in the state. Debtors must comply with both federal bankruptcy laws and local rules of the bankruptcy court in Indiana.