Chapter 11 Bankruptcy And Reorganization

In a Chapter 11 case, the Debtor retains his or her property and is referred to as a debtor in possession (or DIP.) DIP runs the day-to-day operations of the company while the parties work with a Bankruptcy Court to devise and complete a Plan. Once certain requirements are met (i.e., fairness among all creditors and priority of claims), creditors are permitted to vote on the Plan. If the Plan is ratified, then the Debtor continues to operate the business and simply pays its debt in accordance with the terms of the Plan. If a specified majority of the creditors do not vote for the plan, additional requirements may be necessary to confirm the Plan.

In all cases, an important shield against creditors is the automatic stay. This powerful feature automatically halts all repossessions, foreclosures, evictions and other debt collection activity.