Chapter 11 bankruptcy, often referred to as “reorganization bankruptcy” is for businesses that want to keep operating but need time to restructure their finances. The filing of the bankruptcy case imposes an automatic stay on most collection activities of creditors. In a Chapter 11 bankruptcy the debtor usually proposes a plan of reorganization or plan to repay the creditors over time.

Who May File Chapter 11

Chapter 11 typically involves a corporation or other type of business entity, but individuals may also file for Chapter 11 bankruptcy. A personal Chapter 11 may be filed if the individual does not want to liquidate debts in a Chapter 7 bankruptcy or where there is too much debt to qualify for a Chapter 13 bankruptcy.

How the Process Works

The debtor will file a bankruptcy petition and related schedules pertaining to assets, finances, and operations. The debtor may generally continue its business operations, under court supervision, while it reorganizes its business. The actions the business may take include steps to improve its cash flow, reject burdensome lease agreements or other contracts, sell business assets, or restructure secured debt or unpaid taxes.

Ultimately a plan of reorganization or contract that provides for structured or lump sum payments to the creditors is filed with the court and approval from the creditors and the court is sought. The plan will detail how each creditor is to be treated or paid and the manner in which such actions will occur.

The U.S. Trustee and Creditors’ Committees

The United States Trustee has an important role in a Chapter 11 case and monitors the progress of the case and supervises its administration. It examines monthly financial and operating reports of the debtor and provides comment, acceptance, or rejection on certain actions a debtor or other party may desire to take in a case.

Creditors’ committees also may perform an important role in a Chapter 11 case. A committee of unsecured creditors may be formed to collectively represent the interest of unsecured creditors, investigate the conduct and operations of the debtor’s business, and participate in forming a Chapter 11 plan.


Chapter 11 bankruptcy is designed to stop immediate creditor actions, allows a business to continue its operations and work out a payment plan with the creditors. Individuals may find a personal Chapter 11 bankruptcy advantageous in certain circumstances.

If you own or operate a business facing financial difficulties, and would like to discuss your options, Dudley and Smith, P.A. has attorneys who can represent you in this area of debt reorganization.

Steven Opheim is an experienced bankruptcy lawyer and he can help you with Chapter 11 and Chapter 7 bankruptcy cases.  Steven has been representing clients in Minnesota and Wisconsin; including in federal and state courts, for 35 years.  His clients appreciate his commitment, thoroughness, and timeliness to their cases.  Contact him today at 651-291-1717.

The law is continually evolving and Dudley and Smith, P.A.’s blog posts should not be relied upon as legal advice, nor construed as a form of attorney-client relationship. Postings are for informational purposes and are not solicitations, legal advice, or tax advice. A viewer of Dudley & Smith, P.A.’s blog should not rely upon any information in the blog without seeking legal counsel.