Chapter 11 Bankruptcy

Chapter 11 is the reorganization chapter of the bankruptcy code in which a debtor seeks to rehabilitate and reorganize its financial structure. The goal of Chapter 11 is to propose a plan that is accepted by a vote of the creditors or is approved by the Judge despite rejection by the creditors. In a Chapter 11 Plan, the debtor-in-possession must completely satisfy the claims of a higher, dissenting class before the claims of classes lower in priority that can participate in the reorganization. Thus, a corporate debtor’s shareholders cannot receive distribution (or retain any interest) unless the plan provides for the unsecured creditors to be paid in full if the class of unsecured creditors has rejected the plan.

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