The answer to getting out of debt begins here
A chapter 11 is usually filed in order to reorganize a business. It is similar to a chapter 13 bankruptcy but for businesses. A business would file for a chapter 11 bankruptcy when then they are bring in money but it is not enough to cover the present debts. There could be many reasons for not being able to cover present debts such as bad management, incurring unnecessary debt and any other reason that is responsible for taking out more money then is coming in. This type of bankruptcy was created in order to give businesses a chance to restructure some of their secured debts and to renegotiate the unsecured ones in order to give the business an opportunity to get back on their feet. There are situations where individuals are allowed to file a chapter 11 bankruptcy. That will be discussed in a later section.
The chapter 11 is started by filing the appropriate petition along with the supporting schedules and statement of financial affairs. Because it is a business filing for bankruptcy it will require the court to be much more involved in the decision making process. The additional steps that are required to be taken in this type of bankruptcy. One of these steps is that in addition to the petitions and schedules the debtor will have to file the initial motions that are required to keep the business open. In these types of cases you will be required to ask the court for permission to do just about anything. For example the debtor will be required to ask the court in order to pay the employees. These matters have to be handled very delicately if the business is to survive. In many instances the trustee will give operating procedures for the business to operate while in bankruptcy.
The business filing for a chapter 11 bankruptcy will be required to attend a 341 meeting. At this meeting the trustee assigned will be able to inquire about what was put in the schedules in addition to questions about the business. The court could put another individual in charge if it concludes there was a problem with management or how it was being run. The debtor through his attorney will be require to set what is referred to as a plan. Once the plan is approved the debtor will pretty much be supervising so the plan is being run correctly. The problem with these plans is that it could take a while before the creditors get paid. This can be a source of a lot of tension. This process can be very costly for the debtor and make it even more difficult for the business to survive.
The plans that go along with this chapter does not necessarily have to be a reorganization. The plan can be to liquidate the business assets. This will depend on situation