What is Chapter 11
A chapter 11 debtor is usually a corporation, sole proprietorship or partnership, but an individual may also file chapter 11. Chapter 11 is typically used to reorganize a business and the debtor usually files a plan of reorganization to keep the business operating and pay creditors over time. Upon filing a petition for relief under chapter 11, the debtor assumes the additional identity of “debtor-in-possession,” and continues to operate the business and keeps possession and control of its assets while undergoing a reorganization under chapter 11.
Generally, a disclosure statement, which contains information about the assets, liabilities and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization, must be filed with the court. The plan of reorganization also must be filed with the court, and must include a classification of claims and must specify how each class of claims will be treated under the plan.
Effective, April 1, 2002, chapter 11 cases are subject to a quarterly fee, payable to the Clerk, U. S. Bankruptcy Court, from the time the petition is filed until the date of entry of an order dismissing, converting or closing the case. The amount due is based on all disbursements made during the portion of the calendar quarter the case is pending in chapter 11.