Chapter 11 liquidating trustee
The Bankruptcy Code accomplishes this objective through the use of a bankruptcy plan.The debtor in possession typically has the first opportunity to propose a plan during the period of exclusivity.If the case is dismissed, creditors will look to non-bankruptcy law in order to satisfy their claims.Like other forms of bankruptcy, petitions filed under chapter 11 invoke the automatic stay of § 362.In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. In Chapter 11, unless a separate trustee is appointed for cause, the debtor, as debtor in possession, acts as trustee of the business.Any residual amount is returned to the owners of the company. Chapter 11 affords the debtor in possession a number of mechanisms to restructure its business.Chapter 11 usually results in reorganization of the debtor's business or personal assets and debts, but can also be used as a mechanism for liquidation.
In order to be confirmed over their objection the plan must not discriminate against that class of creditors, and the plan must be found fair and equitable to that class.
The court is ultimately responsible for determining whether the proposed plan of reorganization complies with the bankruptcy law.
One controversy that has broken out in bankruptcy courts concerns the proper amount of disclosure that the court and other parties are entitled to receive from the members of the ad hoc creditor's committees that play a large role in many such proceedings.
This period allows the debtor 120 days from the date of filing for chapter 11, to propose a plan of reorganization before any other party in interest may propose a plan.
If the debtor proposes a plan within the 120-day exclusivity period, a 180-day exclusivity period from the date of filing for chapter 11 is granted in order to allow the debtor to gain confirmation of the proposed plan. If the judge approves the reorganization plan and if the creditors all agree the plan can be confirmed.