Liquidating trustee plan of reorganization
Under Chapter 11, the debtor and creditors can structure an orderly sale of assets, and provide for a quicker distribution of the sale proceeds than would occur under Chapter 7.
Chapter 11 can be filed by almost any corporation, partnership or individual.
Chapter 7 is also used by businesses to terminate operations, and resolve tax liabilities that might otherwise become personal liabilities of the principals.
Chapter 11 bankruptcy can also be filed to liquidate the assets of a business, in whole or in part, usually under the control of existing management.
A Chapter 11 case for an individual is similar to a case under a Chapter 13 bankruptcy.
Chapter 11 bankruptcy is typically used to reorganize a business as a going concern under court protection.
Upon filing, the debtor in Chapter 11 automatically becomes a “debtor in possession.” As a debtor in possession, the business is authorized to operate without the appointment of a trustee until a plan of reorganization is confirmed, the case is dismissed or converted to a Chapter 7 bankruptcy, or a Chapter 11 trustee is appointed (which is rare).
A state court receivership is often a preferred alternative to Chapter 11, especially when seeking to operate or wind down the affairs of a business under court protection without the complexity and expense of a bankruptcy restructuring.A Chapter 7 bankruptcy is intended to quickly eliminate all dischargeable debt, and allow individuals to begin rebuilding their finances as quickly as possible.