As the U.S. Courts point out, you must file a plan of reorganization along with your disclosure statement. When you submit an order of relief, you will have as long as 120 days to develop this plan. However, smaller businesses or companies with lower debt may have 100 days.
That plan should include a classification of all your secured and unsecured debts. For example, some debts may be paid in full, and others may only be partially paid. You must show which debts will be treated in which way. You should also include how those debts will be paid. Some businesses downsize in order to reduce expenses, thereby freeing up assets to make payments.
Creditors have the right to vote on whether or not they accept your reorganization plan unless you are going to pay off all debts in full. For the bankruptcy court to approve the plan, at least one class of the impaired claims – or those that will not be paid in full – must vote in favor of your plan.
There are a number of complexities associated with filing for a Chapter 11. Getting it right is key to ensuring your company has the best chance at a better financial future. For more information on this topic, please visit our page on business bankruptcy.