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

A liquidating plan is a type of reorganization plan that is used in a Chapter 11 bankruptcy in Tennessee. In a Chapter 11 bankruptcy, the debtor is allowed to restructure their debts in order to regain financial stability without having to liquidate their assets, meaning they can keep ownership of their possessions. A liquidating plan is an option for a debtor to pay off their debts by restructuring their assets and liquidating some of their excess assets over time. This allows the debtor to keep some of their assets while still paying off all their debts. Under a liquidating plan, creditors are paid over a predetermined period of time. The debtors must choose an amount of time that is manageable while still allowing the creditors to receive payments in a timely manner. During this period, the debtor must make payments on their debts according to the plan. At the end of the predetermined period of time, the debtor is released from their debts and their assets are returned to them. A liquidating plan can help to ease the financial burden of a Chapter 11 bankruptcy and prevent the debtor from needing to liquidate all of their assets. It allows creditors to receive payments in a timely manner while still allowing the debtor to remain in possession of their assets.

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

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