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 Rhode Island, 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 in possession (the individual or business filing for bankruptcy) has the exclusive right for a certain period to propose a reorganization plan. This plan outlines how the debtor intends to operate moving forward and how it will handle its debts, which may include measures such as downsizing operations and renegotiating debts. Creditors and the bankruptcy court must approve the plan. If the plan is accepted, the debtor will make payments according to the plan's terms and can continue operating the business. The goal of a Chapter 11 bankruptcy is to allow the debtor to become profitable again while satisfying creditor claims to the greatest extent possible. It's important to note that while the process is governed by federal law, local rules and procedures can also apply, and an attorney experienced in Rhode Island's bankruptcy practices can provide guidance specific to the state.