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 New Jersey, as in all states, Chapter 11 bankruptcy is governed by federal law under the U.S. 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 continue operations and manage debt repayment. The reorganization often involves reducing operational costs through downsizing and renegotiating debts with creditors. The debtor's proposed 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 terms of the plan. It's important to note that while the process is federally regulated, local bankruptcy courts in New Jersey may have specific procedures and requirements for the filing and approval of a Chapter 11 reorganization plan. Debtors typically work with an attorney to navigate the complexities of the bankruptcy process and to ensure compliance with all legal requirements.