In a Chapter 11 bankruptcy, the individual or business filing bankruptcy (debtor) has the first opportunity to propose a reorganization plan—to reorganize the debtor’s operations and payment of debts. A Chapter 11 plan is an agreement between the debtor and its creditors as to how the debtor will operate and pay its debts going forward.

Chapter 11 plans often include downsizing of the debtor’s operations to reduce expenses, and renegotiation of debts. If the proposed reorganization plan is accepted by the court and the creditors, the bankruptcy process moves forward.

In Alaska, as in all states, Chapter 11 bankruptcy is governed by federal law under the United States Bankruptcy Code. Chapter 11 allows for reorganization, typically involving a corporation or partnership. A debtor in Chapter 11 has the exclusive right for 120 days to propose a reorganization plan after the petition date. The plan outlines how the debtor will restructure its business and repay creditors over time. This may include downsizing business operations to cut costs and renegotiating debts with creditors. Creditors may vote on the plan, and if the required number of creditors vote in favor, the plan can be confirmed by the court. If the plan is confirmed, the debtor can continue to operate while making payments according to the plan's terms. If the debtor fails to propose a plan or if the proposed plan is not accepted and confirmed, creditors or other parties in interest can propose competing plans.