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 Wyoming, as in all 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. The debtor usually has a 120-day period to propose a reorganization plan post-petition, during which they have an exclusive right to propose the plan without interference from creditors. This plan details how the debtor intends to operate and pay obligations moving forward. It 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 confirmed by the court and accepted by the required number of creditors, the debtor can proceed with the reorganization under the terms of the plan, which binds both the debtor and the creditors. If the debtor fails to propose a plan or if the proposed plan is not accepted, creditors may propose their own reorganization plan.