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 Pennsylvania, 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 and sole proprietors who meet certain criteria. Under Chapter 11, a debtor usually proposes a plan of reorganization to maintain its business operations while paying creditors over a period of time. The plan must be approved by the creditors and the bankruptcy court. Chapter 11 provides the debtor with an automatic stay against collection actions from creditors, which allows the business to continue operating while the reorganization plan is being developed and implemented. The process is overseen by a bankruptcy court in Pennsylvania, and debtors are required to file their petitions and plans in the federal bankruptcy court that has jurisdiction over their area. It's important for those considering Chapter 11 bankruptcy to consult with an attorney to navigate the complex process and legal requirements.