Chapter 11 Bankruptcy
In a Chapter 11 bankruptcy, the debtor keeps control and ownership of his or her assets. This particular form of bankruptcy is often referred to as “debtor in possession”, or DIP. What this means is that the debtor runs the daily affairs of the business, while the court and creditors work to iron out a bankruptcy repayment plan. This Chapter is also regarded as the one where businesses have a chance at reorganization or rehabilitation. Although it is mostly businesses and corporations that file Chapter 11 bankruptcy, there are cases where individuals with massive debts and assets will file Chapter 11.
Once a plan has been drafted, those participating in the process are allowed to vote on the plan. Once it is confirmed, the debtor still runs the business, but will be paying the debts as per the voted upon plan. However, if the plan is not confirmed, there may be additional requirements mandated by the court to ensure the plan is confirmed.
While most bankruptcies filed are either Chapter 7 (almost 65 percent of U.S. bankruptcies) or Chapter 13, there are many who opt to file for Chapter 11. Typically, businesses and corporations will file under Chapter 11 or Chapter 7.