Different types of bankruptcy and the plan of reorganization in Chapter 11
During the first 120 days in these types of bankruptcy, only a debtor-in-possession may file a reorganization plan. The debtor is additionally allowed 60 days to obtain confirmation of plan terms by the Court. The Court can either increase or decrease this total time period days.
Bankruptcy types vary. In this particular circumstance, If a plan is not filed timely, other parties in interest may file proposed plans. Likewise, if the debtor's plan is not confirmed within the allowed time limit, parties in interest may also file proposed plans. In practice, if the debtor's proposed plan is not approved, or contested, the Court will either extend allotted time if agreement is likely, or consider plans proposed by adverse parties. The Court may also allow creditors to play a more active role if the debtor's plan is not accepted. For more information, see:
Reorganization plans in these types of bankruptcy tend to fall with two broad categories: 1) reorganization for continued operation of a business, or 2) liquidation and distribution of all assets. Liquidation under these types of bankruptcy is often more advantageous than Chapter 7 because of the active role the debtor plays in selling assets, rather than relying upon a trustee and public auctions.
Types of bankruptcy classifications
Plans classify all claims as either secured, unsecured, priority and equity owner (stockholders for instance.) Within each class, 2/3 of the value and 1/2 of the number of claims must approve the plan. Also, if multiple plans are filed, the Court may consider all plans for confirmation, and must consider those preferred by creditors as a first priority.
