Chapter 11 bankruptcy is used by businesses or individuals to restructure and reorganize assets and liabilities. Unlike Chapter 13, there are no limits on the amount of debt and it is well suited for the needs of individuals and businesses.

Debtors typically retain possession of assets and operate the business under the supervision of the Bankruptcy Court and for the benefit of creditors. However, if Debtors manage the business ineffectively or fraudulently, then the Court may appoint a Trustee.

The U.S. Trustee may appoint a creditors committee in larger cases from the 20 largest unsecured creditors who are not insiders. This committee represents all of the creditors and oversees the Debtor’s business operations. This committee also negotiates a Chapter 11 reorganization plan with the Debtor and votes to confirm the plan.

Chapter 11(s) require significant efforts from both Debtors and their attorneys. Chapter 11 Debtors must file monthly reports of cash receipts and disbursements and must assist their attorneys in the preparation of a Disclosure Statement and Plan. Generally, approval of the Plan is a 2 step process. First the Disclosure Statement must be approved, then the Plan may be confirmed if a sufficient number of creditors vote their acceptance of the Plan.