Reorganizing your business

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Updated: 4/13/2007 3:35 pm
Under Chapter Eleven, a corporation, small business, or individual who has incurred sufficient debt may file for protection from creditors while it reorganizes. During this time, the business is protected by, and under the supervision of, the bankruptcy court and may continue to operate. Individuals, partnerships, and corporations in business may reorganize under the Bankruptcy Act. The first step is to file a plan with the bankruptcy court. The plan may be filed by the debtor, or any party of interest, or by a committee of the creditors, and divides ownership interests and debts into those that will be affected by the plan's adoption and those that won't. Then it must specify what will be done for those affected. The plan must be approved by the bankruptcy court. Afterwards, owners and creditors have to stick to the plan and can't go back to their original positions prior to the filing.

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