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Bankruptcy

Chapter 11 bankruptcy

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 Massachusetts, as in all states, Chapter 11 of the Federal Bankruptcy Code allows for the reorganization of a debtor's business affairs, debts, and assets. This provision is typically used by corporations and partnerships, but it is also available to individuals and sole proprietors who meet certain criteria. Under Chapter 11, a debtor usually proposes a plan of reorganization to maintain business operations while paying creditors over a period of time. The process involves negotiating with creditors to alter the terms of debts, which may include reducing the debt amounts, extending repayment times, or changing interest rates. The goal is to restructure the business in a way that it can become profitable again while ensuring that creditors receive as much payment as possible. The debtor remains in control of the business operations as a 'debtor in possession,' but the bankruptcy court must approve major business decisions. This process can be complex and lengthy, often requiring the expertise of an attorney specialized in bankruptcy law.

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When businesses face financial struggles, they might consider various solutions, and among the most formidable is Chapter 11 bankruptcy. It's a process synonymous with corporate reorganization, but what does it truly entail?

Bankruptcy

Chapter 11 bankruptcy

As a LegalFix Member You Will Be an Important Client of Local Law Firms

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Massachusetts State Code

Massachusetts State Code

Bankruptcy

Chapter 11 bankruptcy

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