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 North Carolina, as in all states, Chapter 11 of the Federal Bankruptcy Code governs the process of reorganization for corporations, partnerships, and individuals in business. This legal pathway is designed to help a debtor that is facing financial difficulties to restructure its debts and continue operating its business. Under Chapter 11, the debtor typically proposes a plan of reorganization that must be approved by the creditors and the bankruptcy court. This plan outlines how the debtor intends to operate moving forward and how it will pay its creditors over a period of time. While the debtor usually remains in control of its business operations as a 'debtor in possession,' the court can appoint a trustee to oversee the process if needed. It's important to note that while Chapter 11 is a federal provision, local rules and procedures can vary, and an attorney experienced in North Carolina bankruptcy law can provide guidance specific to individual cases.