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Chapter 11 Bankruptcy
A legal procedure that allows businesses or certain individuals to to reorganize their debts under a court-approved plan while receiving protection from lawsuits brought by creditors during the reorganization period.
Chapter 11 bankruptcy essentially buys an individual or organization time to meet their financial obligations and provides for these debts to be paid over time. Debtors are often able to take out loans with favorable rates to pay off existing debts or cancel existing contracts in order to garner financial relief under Chapter 11 bankruptcy. If a companyâ??s debts exceed its assets, the ownersâ?? rights are transferred the companyâ??s creditors under this type of bankruptcy in order to satisfy the ownersâ?? financial obligations.
Chapter 11 is generally regarded as the most expensive and complex type of bankruptcy.