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 Missouri, 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 usually has the exclusive right for 120 days to propose a reorganization plan after filing for Chapter 11. This plan details how the debtor intends to operate and settle its obligations moving forward. It may include strategies such as downsizing business operations to cut costs and renegotiating debts with creditors. Creditors and the bankruptcy court must approve the plan for it to be implemented. If the plan is accepted, the debtor can proceed with the reorganization under the oversight of the court, which may involve continued operation of the business and repayment of creditors over time. The goal of Chapter 11 is to allow the debtor to become profitable again while satisfying creditor claims to the greatest extent possible.