Chapter 11 is a more complex payment plan for businesses who wish to get rid of debt, with plans to reorganize lasting for five years. It is sometimes used as a planning tool. In restructuring debt, the Chapter 11 debtor can get new loans, and give those lenders first priority on his earnings. The debtor can frequently reject unproductive contracts, and is protected from lawsuits outside of the bankruptcy court.
A plan for reorganization is submitted to the judge, which interested creditors have the right to vote on. If the judge approves of that plan, and creditors agree, the business will pay debts according to that confirmed bankruptcy plan. Because of the complexity of these cases, the retainer fee is often at least $10,000, and these cases will, even for modest reorganizations, generally cost the entrepreneur about $50,000 or more in legal fees.
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Note: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.