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

A plan of reorganization is a key feature of Chapter 11 bankruptcy law in Utah. A plan of reorganization is a plan proposed by a debtor to the creditors (those owed money) and the bankruptcy court to restructure the debts of the debtor. This plan typically includes the creation of a repayment plan over a period of time and adjustment of the amount owed to the creditors. The debtor is allowed to propose a plan of reorganization, however, before the plan can be implemented the creditors and court must approve the plan. This plan must comply with the rules and regulations of the Bankruptcy Code. The plan must state how much the creditors will receive from the debtor and prolong the repayment of the debt. The terms of repayment must also be explained in the plan. In the instance of reorganization, the debtor remains in control of the business and is not sold off during the bankruptcy process. This allows the debtor to keep control of their assets while restructuring the debt to a more feasible amount. A plan of reorganization is most feasible for businesses that are able to continue operations. The main goal of a plan of reorganization is to give debtors the opportunity to remain afloat and keep control of their business or assets while renegotiating their debts in a way that is beneficial to both parties. A plan of reorganization allows debtors an opportunity to remain viable and continue operations after filing Chapter 11 bankruptcy in Utah.

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

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