What is a “debtor-in-possession budget” in a Chapter 11 bankruptcy?

A “debtor-in-possession budget” in a Chapter 11 bankruptcy is a budget prepared by a debtor in West Virginia deciding to reorganize their business through the bankruptcy process. This budget is presented in court and outlines the debtor’s current financial situation and expenses. It usually includes the expected future income and expenses of the reorganizing business. The purpose of a debtor-in-possession budget is to show that the business can actually afford to repay creditors, while still being able to maintain operations. The budget must be approved by the court, and it outlines how the debtor will use the funds generated through their restructuring of debt. Generally, the debtor-in-possession budget includes cash flow projections, such as estimated payments for bills, projected earnings, and other costs associated with reorganizing the business. It also details how funds will be allocated between the debtor and creditors, such as payment plans, fees, and other costs necessary to the reorganization process, and how funds will be used to repay creditors. The court will review the debtor-in-possession budget to determine if it is feasible and if the reorganized business will be able to make payments to its creditors. Ultimately, the court will decide if the debtor-in-possession budget is adequate for the reorganization and will approve or reject the plan. It is important for the debtor to provide accurate information on their budget in order to be successful in the Chapter 11 bankruptcy process in West Virginia.

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What is a “debtor-in-possession budget” in a Chapter 11 bankruptcy?

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