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

A liquidating plan is a type of plan that is used in a Chapter 11 bankruptcy, which is a form of bankruptcy protection available to businesses and individuals in the state of Washington. In Chapter 11 bankruptcy, the debtor can seek to reorganize their debt, or they can opt to pursue a liquidating plan. A liquidating plan is when all of the debtor’s assets are sold and the proceeds from these sales are used to pay off the debt. This type of plan is often chosen when the debtor does not have enough money to pay off all of their debt in a single payment. In order for the liquidating plan to be successful, the debtor must have enough assets to cover all of their debts. The process of creating a liquidating plan involves the debtor working with their creditors, who must approve the plan. Once the plan is approved, a trustee will be appointed to oversee the process of liquidating the assets. After the assets are sold, the proceeds will be distributed between the creditors according to the plan. A liquidating plan is a useful tool for those who are unable to pay off all of their debt in a short period of time. It is important to keep in mind, however, that it does not erase the debtor’s debts and creditors can still attempt to collect on the debt even after the liquidation plan has been approved.

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

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