What is a “liquidating plan” in a Chapter 11 bankruptcy?

A liquidating plan in a Chapter 11 bankruptcy is when a court-approved agreement between the debtor (the individual or business filing for bankruptcy) and their creditors is made and the debtor will pay back a certain portion of their debt over some period of time. This plan must be approved by the court and must include certain information such as a list of all creditors, estimated payment amounts, and deadlines for payments. The liquidating plan is designed to give debtors a chance to pay off their debt without having to liquidate or sell off assets. Under the liquidating plan, a debtor can continue operating their business and make payments to creditors according to the payment plan agreed upon. During the repayment period, debtors will be responsible for managing their business and making sure they can continue to meet their payment obligations. Once the payments have been made, the remainder of the debt will be discharged. In Oklahoma, debtors filing for Chapter 11 bankruptcy must be able to prove that the liquidating plan will benefit all creditors as much as possible. Creditors must also be given the opportunity to vote on whether or not they agree with the liquidating plan. If the plan is approved by the court and a majority of creditors, then the debtor can begin making payments in accordance with the payment schedule.

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What is a “liquidating plan” in a Chapter 11 bankruptcy?

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