What are the conditions for a Chapter 11 bankruptcy
| The significance of bankruptcy laws in the United States is that they allow individual and businesses to get out of their debts by either getting them reorganized or through liquidation, where the assets of the debtor are sold and paid back to the creditor.
There are multiple ways of filing a bankruptcy under the Bankruptcy Code that are contained within a chapter of the law. One such chapter is the Chapter 11 that allows debtors to get their credit reorganized under the supervision of the court.
Chapter 11 bankruptcy filing is least preferred when compared to Chapter 7 or Chapter 13 primarily due to the cost complexity involved in Chapter 11. Chapter 11 bankruptcy filing typically involves reorganizing debts of a business that might be a corporation or a sole proprietorship or a partnership business. Under the Chapter 11 bankruptcy filing, the debtor can still continue to operate his business while repaying his credit through scheduled regular payments to the creditors.
A debtor continues to enjoy the possession of his assets even after filing for Chapter 11 bankruptcy. A creditors committee is appointed by the court of justice in order to oversee the debt management operations and the debt reorganization plan of the debtor.
However, not every company or individual can file for a Chapter 11 bankruptcy. Chapter 11 bankruptcy is inapplicable if the individual had already applied once in the previous six months. Apart from this, one cannot file a Chapter 11 bankruptcy if the earlier petition was dismissed by the court or law or if the individual didn’t appear in the court or comply with the court’s orders.