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 West Virginia, as in all states, Chapter 11 of the Federal 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 who have substantial debts and assets that exceed the limits of other bankruptcy chapters. Under Chapter 11, a debtor, also known as the bankrupt entity, proposes a plan of reorganization with the goal of restructuring debts and continuing operations while repaying creditors over a period of time. The process involves negotiation with creditors and court approval of the reorganization plan. The debtor generally retains control of their assets and operates as a 'debtor in possession' under the court's oversight. The plan must be in the best interest of the creditors and is subject to their acceptance and court confirmation. Chapter 11 provides a mechanism for businesses and individuals in West Virginia to restructure their financial obligations while maintaining their operations, with the ultimate aim of returning to profitability and financial stability.