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 South Dakota, as in other states, Chapter 11 bankruptcy is governed by federal law, specifically the U.S. Bankruptcy Code. Under Chapter 11, both individuals and businesses can reorganize their debts and continue operations. The debtor usually has a 120-day period to propose a reorganization plan after filing for bankruptcy. This plan details how the debtor intends to operate and settle its obligations. The plan may include strategies such as downsizing business operations to cut costs and renegotiating debts with creditors. Creditors may vote on the plan, and if it garners enough support, the bankruptcy court will hold a confirmation hearing to determine whether to approve the plan. If the court confirms the plan, the debtor will make payments according to its terms and can emerge from bankruptcy once all obligations under the plan are satisfied. It's important to note that if the debtor fails to propose an acceptable plan within the exclusivity period, creditors may propose competing plans.