Chapter 11 bankruptcy

Chapter 11 bankruptcyis the formal process that allows debtors and creditors to resolve the problem of the debtor’s financial shortcomings through areorganization plan; see Tamir v. United States Trustee.Accordingly, thecentral goalof chapter 11 is to create a viable economic entity by reorganizing the debtor’s debt structure. Unlikechapter 7, chapter 11 is not aliquidationof the debtor’s assets. Rather, it is a reorganization of existing assets,principally as debt. Theconfirmedchapter 11 plan becomes acontractbetween the debtor and creditors, governing their rights and obligations; see In re Nylon Net Company.When a company can no longer pay its debts, it generally creates a relationship between two stakeholders–thedebtorandcreditors. The debtor seeks relief from thedebtthey cannot repay, while the creditors seek to recollect their debts, quickly and efficiently. Through the “chapters” in theBankruptcy Code, Congress created the rules governing the relationship between creditors and t...