Chapter 11 Bankruptcy is known as a “reorganization” because it allows a business to continue operating and work out a way to pay off its creditors over time. You can use Chapter 11 to restructure debts, catch up on delinquent payments, and still keep your business running.
Individuals can also use Chapter 11, but it is more commonly used by partnerships and corporations. If your business owes too much money to be eligible for a Chapter 13 bankruptcy, then Chapter 11 can often be an attractive option.
The main purpose of a Chapter 11 case is to get a plan of reorganization approved by the Bankruptcy Court. Your creditors will be separated into various classes, depending on whether they are secured, unsecured, or entitled to priority over other creditors for certain reasons.
It can be challenging to get your creditors to agree to the plan of reorganization. There are certain situations where you can force the plan on your creditors, but the best strategy is usually to find a way to negotiate with your creditors, and get enough of them to approve of the reorganization plan.