Chapter 11 Business Bankruptcy Lawyers - What is Chapter 11 Bankruptcy?

Chapter 11 Bankruptcy is a legal process designed to reorganize the financial structure of a business that is unable to pay its creditors. The business is usually allowed it to continue day-to-day operations during the restructure, though a trustee might take over if fraud or gross mismanagement was established. The bankruptcy court must approve all significant business decisions.

The concept behind Chapter 11 is that it is better for the business to succeed and repay creditors over time, rather than to cease operations entirely. In addition to protecting the interests of the creditors, Chapter 11 is designed to protect the jobs of existing employees.

At least one committee will be appointed to represent the interests of the creditors. The committee will work with the company to develop a plan of reorganization to bring the business out of debt. This plan must be accepted by the creditors and approved by the court. If the creditors reject the plan, the court still may approve it if the court finds it to be fair.