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 Maine, as in all states, Chapter 11 of the Federal Bankruptcy Code governs the process of reorganization for corporations, partnerships, and individuals engaged in business. This legal framework allows a debtor to propose a plan to restructure its finances while continuing to operate the business. The plan typically includes mechanisms for repayment of creditors over a period of time. Chapter 11 is designed to balance the interests of the debtor and the creditors, providing a way for the debtor to regain financial stability and maintain operations, while ensuring that creditors receive some form of payment. It is important for those considering Chapter 11 bankruptcy to consult with an attorney who is experienced in federal bankruptcy law and its application within the state of Maine.