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 Indiana, as in other states, Chapter 11 bankruptcy is governed by federal law under the United States Bankruptcy Code. This type of bankruptcy is designed for the reorganization of businesses, although individuals can also file for it. The debtor in possession has the exclusive right for a certain period to propose a reorganization plan, which details how the business will continue to operate and how debts will be repaid. The plan may include measures such as downsizing operations to cut costs and renegotiating debts with creditors. Creditors and the bankruptcy court must approve the plan. If the plan is confirmed by the court, the debtor can proceed with the reorganization under the oversight of the court. This process allows the debtor to attempt to become profitable again while satisfying creditor claims to the extent possible. The specific procedures and outcomes can vary based on the complexity of the case and the debtor's financial situation.