{"id":887,"date":"2020-08-21T18:38:55","date_gmt":"2020-08-21T18:38:55","guid":{"rendered":"https:\/\/santarosabankruptcy.us\/?page_id=887"},"modified":"2020-08-21T18:38:55","modified_gmt":"2020-08-21T18:38:55","slug":"liquidating-plan","status":"publish","type":"page","link":"https:\/\/santarosabankruptcy.us\/chapter-11\/liquidating-plan\/","title":{"rendered":"Liquidating Plan in Chapter 11 Bankruptcy"},"content":{"rendered":"\n

A debtor has the right to choose what kind of plan to submit in a Chapter 11 Bankruptcy. Upon filing, the debtor is given a period of 120 days<\/a>, wherein he\/she has the exclusive right to submit a plan for approval and confirmation. The expiration of this exclusive period does not mean that the debtor is precluded from submitting a plan; he or she can still file one, with the possibility of the creditors filing one of their own.<\/p>\n\n\n\n

Although a Chapter 11 Bankruptcy is primarily considered to be a reorganization bankruptcy, the debtor is within his\/her right to submit a liquidating plan<\/a>. In a liquidating plan, the business as well as its assets are sold off to satisfy the debts and claims made on the estate. In a way, the submission of a liquidating plan is akin to Chapter 7 Bankruptcy, but with a few key differences.<\/p>\n\n\n\n

Liquidating Plan<\/h2>\n\n\n\n

In a liquidating plan, the debtor proposes to sell off the assets he\/she is in possession of, either on a piecemeal basis or as a going concern. The proceeds of the sale will then go to the creditors to satisfy their claims; distribution will follow the priority scheme used in a Chapter 7 Bankruptcy case.<\/p>\n\n\n\n

A liquidating plan is usually proposed by the creditors themselves in response to a lack of confidence in the debtor\u2019s ability to make the business profitable. However, a liquidating plan can also be proposed by the debtor personally, especially when he\/she believes it is the best course of action considering the circumstances.<\/p>\n\n\n\n

Although the submission of a liquidating plan is akin to proceedings in a Chapter 7 Bankruptcy<\/a> case, there are a few differences between the two.<\/p>\n\n\n\n

Distinguished from Chapter 7<\/h2>\n\n\n\n

In a liquidating plan submitted under Chapter 11 Bankruptcy, the debtor in possession retains control of the business and its assets as they are sold<\/strong>. In fact, the debtor is allowed to continue operating the business pending the liquidation. This is a major difference from a Chapter 7 Bankruptcy case, where a trustee<\/a> is appointed by the court to liquidate the assets of the debtor. Oftentimes in a Chapter 7 case, the debtor has little to no say in the liquidation of assets.<\/p>\n\n\n\n

For a liquidating plan, the debtor in possession is responsible for carrying out the liquidation themselves<\/strong>. This means that the debtor can potentially seek out the highest price for the assets and maximize its value during liquidation. Compare this with Chapter 7 bankruptcy, where the trustee\u2019s main concern is merely the quick disposition of assets and payment of creditors.<\/p>\n\n\n\n

The debtor in possession has the option of selling the business as a going concern<\/strong>. This basically means that the debtor can sell the business as a whole, including potential goodwill attached to the business, rather than selling it on a piecemeal basis. Selling the business as a going concern could potentially yield a larger sum of money rather than if the business were sold on a piecemeal basis.<\/p>\n\n\n\n

If the debtor can sell the business for the highest price, there is the possibility of the debtor retaining some equity<\/strong>. Thus, the debtor has an added incentive in maximizing the sale of the business. This is in contrast to Chapter 7 bankruptcy, where the trustee has little to no incentive in retaining equity.<\/p>\n\n\n\n

Lastly, by choosing to submit a liquidating plan under Chapter 11 Bankruptcy<\/a>, the debtor avoids paying a trustee\u2019s administrative fees<\/strong>. Fees such as these could take a toll on the proceeds of the sale. In a Chapter 11 Bankruptcy case, the appointment of a case trustee is not mandatory; in fact, it is rarely done. In a Chapter 7 Bankruptcy, however, the appointment of a trustee is mandatory, as well as the payment of fees to that trustee.<\/p>\n","protected":false},"excerpt":{"rendered":"

A debtor has the right to choose what kind of plan to submit in a Chapter 11 Bankruptcy. Upon filing, the debtor is given a period of 120 days, wherein he\/she has the exclusive right to submit a plan for approval and confirmation. The expiration of this exclusive period does not mean that the debtor […]<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":811,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":""},"_links":{"self":[{"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/pages\/887"}],"collection":[{"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/comments?post=887"}],"version-history":[{"count":1,"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/pages\/887\/revisions"}],"predecessor-version":[{"id":888,"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/pages\/887\/revisions\/888"}],"up":[{"embeddable":true,"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/pages\/811"}],"wp:attachment":[{"href":"https:\/\/santarosabankruptcy.us\/wp-json\/wp\/v2\/media?parent=887"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}