Debtors filing for Chapter 11 bankruptcy must file a plan for reorganization that must be approved by creditors and confirmed by the bankruptcy court. A reorganization plan takes into account the business’s liabilities and assets, and attempts to prove that the business will be able to fund proposed payment plans to the company’s creditors. The debtor must also prove that they will not be redeeming any extra profits by liquidating assets. A business may do this by planning:
Fractional payments
Cuts to unprofitable or nonfunctional parts of the company
Layoffs
The plan must be as accurate and feasible as possible in order for creditors and the court to agree to the new obligations put forth by the debtor under Chapter 11.