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 North Dakota, as in all states, Chapter 11 bankruptcy is governed by federal law under the United States Bankruptcy Code. When an individual or business files for Chapter 11 bankruptcy, the debtor is given the initial chance to propose a reorganization plan. This plan outlines how the debtor intends to restructure its business operations and manage debt repayment. The reorganization plan may include strategies such as downsizing operations to cut costs and renegotiating debts with creditors. The debtor's plan must be submitted to the court for approval and must also be accepted by the creditors. If the court and the creditors approve the plan, the debtor can proceed with the reorganization under the oversight of the bankruptcy court. It's important to note that while the process is federally regulated, local rules and procedures can vary, and working with an attorney who is experienced in Chapter 11 cases in North Dakota can be crucial for navigating the bankruptcy process effectively.