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 Tennessee, as in other states, Chapter 11 of the Bankruptcy Code allows for the reorganization of a debtor's business affairs, debts, and assets. It is most commonly utilized by corporations and partnerships, but it is also available to individuals who have substantial debts and assets that exceed the limits for Chapter 13 bankruptcy. Under Chapter 11, a debtor typically proposes a plan of reorganization to maintain business operations and pay creditors over a period of time. The plan must be accepted by the creditors and approved by the bankruptcy court. Chapter 11 provides the debtor with an opportunity to restructure while gaining protection from litigation by creditors through an automatic stay. The process is complex and often requires the guidance of an attorney with expertise in bankruptcy law.