Chapter 11- Corporations or Partnerships
Most frequently used by failing corporations or partnerships, but also available for individuals, Chapter 11 Bankruptcy permits a debtor to reorganize, rather than liquidate, current debts under laws governed by the U.S. Bankruptcy Court.
By filing Chapter 11 the debtor usually remains in control of its business and assets. This grants the debtor an opportunity to obtain financing and loans based on the business’ earnings while also remaining under supervision of the court as well as its creditors.
Once a debtor petitions for Chapter 11, a creditor committee is established by the U.S. Trustee. This committee is made up of 20 of the largest unsecured creditors that are chosen to negotiate and vote on a payment plan that would satisfy all parties.
Although Chapter 11 is very flexible, it is a very complicated process, and comes with many stipulations. It is advised that if inquiring Chapter 11- Reorganization, a petition should first be reviewed with an attorney.
Chapter 12- Farmers and Fisherman
Similar in many ways to Chapter 11, filing for chapter 12 bankruptcy relief is designed to permit family farmers and fisherman an opportunity to repay their debts over a given period of time. The reason for its existence is to benefit those who are unlike wage earners and have larger debts due to economic realities.