What happens to my creditors in a Chapter 11 bankruptcy?

In North Dakota, Chapter 11 is the form of bankruptcy used by businesses or large corporations, not individuals. When a company files for Chapter 11 bankruptcy in North Dakota, it is allowed to continue operating while it creates a restructuring plan to fix its finances and become more profitable. When a company files for Chapter 11 bankruptcy, all of its creditors (people who the company owes money to) are notified that the company is bankrupt. As part of the reorganization process, the company must work out an agreement with its creditors to pay back some or all of the money owed. This usually means making payments over a period of time. The company must also submit a reorganization plan to the court which outlines how the company plans to pay back its creditors. The court must approve the plan before it can be put into effect. Once the plan is approved, the company must follow the plan and make payments to its creditors in accordance with the plan. The creditors may also be asked to agree to accept less money than what is owed, which is called a "cram down". This is more likely to occur if the bankruptcy is filed as a Chapter 11 bankruptcy. Creditors have the right to object to the terms of the plan but their objections can often be overruled by the court if it believes the plan is reasonable and fair. Ultimately this is the way that creditors are paid back after a company files for Chapter 11 bankruptcy in North Dakota.

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