Chapter 11 Bankruptcy Attorney Carlsbad, San Diego
Chapter 11 is generally used by businesses in order to reorganize the business. A Chapter 11 bankruptcy case commences as soon as a bankruptcy petition is filed with the bankruptcy court. Upon filing the petition, the debtor automatically becomes what is called “debtor in possession”. That means the debtor can keep and control all its assets while undergoing reorganization under chapter 11 until the case is dismissed or converted, or a trustee is appointed.
A reorganization plan must be filed with the bankruptcy court together with a written disclosure statement, which must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to make an informed judgment about the plan. The court must approve the written disclosure statement in confirmation hearing, before the plan is accepted or rejected.
The plan must include a classification of all claims and how the claims are managed under the plan. Creditors who will be paid less than the full value of their claims vote on the plan. The Bankruptcy Code does not specify time limits for filing the plan, however, the debtor has an exclusive right to file a plan during a 120-day period, which may be extended or reduced by the court.
After the period has expired, any party in interest, except for United States trustee, may file a plan. This is to ensure a case’s timely resolution and to provide incentive for the debtor to file a plan within the exclusive period.