Under Chapter 11 Bankruptcy, a debtor continues his business operations while at the same time reorganizing its financial affairs. Any person or entity eligible to file a chapter 7 Bankruptcy would also be eligible to file a chapter 11. This includes individuals, partnerships or corporations. Unlike a Chapter 7 Bankruptcy, a railroad may also be a debtor in a Chapter 11. An individual may filed a Chapter 11 case, even when he or she is no engaged in business.
Individual debtors whose debts exceed the limits for a Chapter 13 filing, should consider filing a chapter 11 Bankruptcy. “Congress . . .did not place Chapter 11 reorganization beyond the reach of a non business individual debtor” See Toibb v. Radloff (1991) 501 US 157, 161. Thus an individual whose secured debt or unsecured debt exceeds the limits of a Chapter 13 filing, may file for chapter 11 and reorganize his or her finances.
A debtor need not be insolvent to file a Chapter 11 Bankruptcy. As long as a debtor needs to reorganize its finances, a Chapter 11 is permitted.
The only exception to filing a Chapter 11 is a stockbroker or commodity broker, which is not permitted to file a Chapter 11, but may file under special provisions under a Chapter 7.
If you have questions regarding your eligibility to file a Chapter 11 Bankruptcy, please call for a free consultation at 714-639-1990. My office is located in Northern Orange County, California. I would be happy to help you with any of your questions.