How are creditors paid in a Chapter 11 bankruptcy?

In a Chapter 11 bankruptcy in Utah, creditors are paid back based on the amount of money they are owed. This is known as the "claims" process. Creditors who are owed less than $2,000 may be paid back in full. However, creditors who are owed more than $2,000 must be paid back according to a repayment plan called an "adjustment of debt" plan. This plan is based on the amount of money the debtor has to pay creditors and the amount of money the debtor can reasonably pay. Priority claims will be paid first, such as secured creditors who have collateral, wages for workers who have been employed within the past 180 days, and contributions to certain retirement plans. These creditors will be paid before unsecured creditors, such as credit card companies or medical bills. The debtor will submit a repayment plan to the court that outlines how and when the creditors will be paid. The court will then assess the repayment plan to ensure that it is fair and equitable for all parties involved. The court may approve or reject the repayment plan or may request changes to the plan before it is finalized. Once the repayment plan is finalized, the debtor will begin to make payments according to the plan. The debtor must keep up with the payments outlined in the repayment plan in order to complete the Chapter 11 bankruptcy process. If the debtor fails to make payments, the bankruptcy case may be dismissed by the court.

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How are creditors paid in a Chapter 11 bankruptcy?

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