What is Chapter 11 Bankruptcy?
Chapter 11 Bankruptcy is the corporate equivalent of Chapter 13 financial reorganization. Pursuant to Chapter 11 procedure, the debtor must prepare and present a plan within 120 days of filing, and it must be approved by the bankruptcy court, trustee, and a committee of the business' top 20 creditors. The plan is prepared with the intention to pay the lenders and creditors a reduced amount over a 5 to 10 year period. If, at any point, the creditors or trustee feel that the business is not being run appropriately, they can petition the court to have a new fiduciary appointed to direct the day-to-day operations. On average, because Chapter 11 is a long and costly process, only about 10% of businesses survive and emerge from Chapter 11 successfully.
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