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Bankruptcy

reorganization plan

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 Maine, as in all states, Chapter 11 bankruptcy is governed by federal law, specifically the U.S. Bankruptcy Code. Under Chapter 11, both individuals and businesses can reorganize their debts. The debtor usually has a 120-day period to propose a reorganization plan post-petition, which outlines how it intends to operate and pay its debts. This plan may include measures such as downsizing operations to cut costs and renegotiating debts with creditors. Creditors may vote on the plan, and if the required number of creditors agree, the plan can be confirmed by the bankruptcy court. If the debtor fails to propose an acceptable plan within the exclusivity period, creditors or other parties in interest can propose competing plans. The goal of a Chapter 11 plan is to allow the debtor to adjust its debts and emerge from bankruptcy as a viable entity.

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Bankruptcy

reorganization plan

Individual & Family Legal Plan

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Maine State Code

Maine State Code

Bankruptcy

reorganization plan

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