Sam Brotman, JD, LLM, MBA December 16, 2013 5 min read

Chapter 11 Bankruptcy


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

Chapter 11 bankruptcy is a form of reorganization under the U.S. Bankruptcy Code. The requirements specific to an individual debtor work much the same as those outlined under chapter 7. However, with chapter 11 bankruptcy, a petition may be voluntary or involuntary. When the petition is involuntary, it is filed by creditors that meet certain requirements (“Bankruptcy Basics, p. 29”). Voluntary petitions require adherence to a prescribed format; debtors must use “Form 1 of the Official Forms prescribed by the Judicial Conference of the United States” (p. 29).

The types of documents that debtors must file are similar to those required under chapter 7, but they are also specific to businesses. For example, debtors must file the following: 1) schedule of assets and liabilities; 2) schedule of current income and expenditures; 3) schedule of executory contracts and expired leases; and 4) statement of financial affairs (p. 29).

Voluntary petitions reference standard information, which includes the debtor’s name, social security number and identification, residence, location of principal assets, debtor’s plan to file, and request for relief. “Upon filing a voluntary petition for relief, under chapter 11, or, in an involuntary case, the entry of an order for relief, the debtor automatically assumes an additional identity as the “debtor in possession. The term refers to a debtor that keeps possession and control of its assets while undergoing a reorganization under chapter 11, without the appointment of a case trustee” (p. 30). The debtor may remain a debtor in possession until the confirmation of the debtor’s plan of reorganization, or the debtor’s case is dismissed, or the conversion of the case to a chapter 7 or chapter 11 case.

Debtors under chapter 11 file a written disclosure statement and a plan of reorganization with the bankruptcy court. The written disclosure statement “must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization” (p. 30). The information required is subject to judicial discretion. On the other hand, the content of the reorganization plan must reference a classification of claims and how those classes of claims will be treated under the plan (p. 30). Voluntary or involuntary petitions involving small business owners require additional documents. Small business cases are defined as a bankruptcy case with a small business debtor.

Chapter 11 bankruptcy relief allows the debtor, in general, to create a liquidating plan. This type of plan allows the debtor to liquidate the business “under more economically advantageous circumstances than a chapter 7 liquidation” (p. 39). Once the plan is confirmed, debts that predate the filing of the petition are discharged. The debtor is still held responsible for making plan payments and is legally bound to the provisions of the plan. Essentially, the “confirmed plan creates new contractual rights, replacing or superseding pre-bankruptcy contracts” (p. 39). Once the confirmation has been entered in the court records, the court may issue an order to administer the estate. All confirmation orders may be revoked at the request of a party in interest.

Brotman Law request consultation


"Sam is a wonderful, results-oriented and extremely knowledgeable and talented attorney, who really has 'heart' in working on behalf of his clients, and explains options in a straightforward, respectful manner. He has assisted us with great outcomes which have added to our quality of life. I would not hesitate to recommend Sam for his services as he is an ethical, personable and expert attorney in his field. You will likely not be disappointed with Sam's work ethic, approach and his efforts."

-Aileen Dwight, Licensed Clinical Social Worker & Psychotherapist

Last updated: June 8, 2024

Receive the Best of
Brotman Law

Get this topic delivered straight to your inbox.

New call-to-action

Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law



Our best stuff: secrets, tax saving tools, and tax defense strategies from the braintrust at Brotman Law.

  • Expanded benefits during your first consultation with the firm.
  • Priority appointment scheduling and appointment times.
  • Complementary access to our firm’s concierge services.
  • Receive updates and “insider only” tax strategies and tactics.
  • And many more benefits.

Not Sure Where to Start?

Step 1 Start Here

Start Here

These ten big ideas will change the way you think about your taxes and your business.

Start Here

Step 2 Learn About Your Situation

Learn About Your Situation

Find the articles and videos you need to make the right tax decisions in the learning center.

Visit the Learning Center

Step 3 Explore Our Services

Explore Our Services

It is not just about what we do, but who we are, why we do it, and how that benefits you.

View All Services

Step 4 Get Your Game Plan

Get Your Game Plan

Meet with us to outline your strategy. No further obligation, 100% money-back guarantee.

Book an Action Plan