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

A liquidating plan is a type of repayment plan that is used in a Chapter 11 bankruptcy. In this type of bankruptcy, the debtor is allowed to remain in business, but must reorganize their debt and finances in order to become financially stable and pay back their creditors. A liquidating plan is the best way to do this. Instead of selling off all of a debtor’s assets in order to pay off their debts, a liquidating plan allows them to keep their assets in order to generate income. It gives the debtor a chance to restructure their debt and take advantage of certain tax benefits in order to make regular payments to creditors over time. With a liquidating plan, creditors are generally able to receive more money than if the debtor had to liquidate their assets. It also allows the debtor to remain in business, which can be beneficial in the long-term. In South Carolina, a liquidating plan must be approved by the court and creditors in order to be effective. Overall, a liquidating plan is a way for a debtor to remain in business and reorganize their debt in order to become financially stable. By taking advantage of certain tax benefits and restructuring their debt, a liquidating plan can provide debtors with the best chance of becoming financially stable and paying back their creditors.

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

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