What is a “plan of reorganization” in a Chapter 11 bankruptcy?

A plan of reorganization is an important part of a Chapter 11 bankruptcy. It is a formal document that outlines how the company or individual filing for bankruptcy will handle their debt. The plan proposes how the debt will be paid back, or “reorganized,” over time. It must be approved by the court and all creditors. The plan of reorganization must be tailored to the specific needs of the debtor. It may propose that some debt be paid in full, while other debt is paid off over a period of time. It may even suggest that some debt be discharged altogether. The plan must also include a budget for the debtor that outlines how they will pay their bills and living expenses. In North Carolina, all Chapter 11 debtors must provide a detailed disclosure statement to all creditors. This document lists all assets and liabilities of the debtor, as well as their entire financial statement. This statement must be provided along with the proposed plan of reorganization. The creditors then have the opportunity to vote on the plan, and the court must approve it before it is put into effect. A plan of reorganization is a crucial component of a Chapter 11 bankruptcy, as it outlines how the debtor will handle their debt and how they can get back on their feet. Without a plan of reorganization, the court may not approve the bankruptcy and the debtor may be unable to reorganize their debt.

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What is a “plan of reorganization” in a Chapter 11 bankruptcy?

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