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 Montana, 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 a debtor's business affairs, debts, and assets. When a business or individual in Montana files for Chapter 11, the debtor typically has the exclusive right for 120 days to propose a reorganization plan. This plan outlines how the debtor intends to operate moving forward and how it will pay its debts. The plan may include strategies such as downsizing operations to cut costs or 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 will make payments according to the plan's terms and can continue to operate the business. If the debtor fails to propose a plan or if the plan is not accepted, creditors may propose alternative plans. The goal of Chapter 11 is to allow the debtor to restructure in a way that it can become profitable again while providing a way to pay back creditors over time.