Reorganization as Primary Purpose
Under Chapter 11, a debtor ordinarily continues business operations while reorganizing its financial affairs. Reorganization is achieved by way of a written plan of reorganization approved by the court pursuant to the plan “confirmation” process. Through a confirmed reorganization plan, the debtor can restructure its obligations to creditors and pay those obligations over time.
“By permitting reorganization, Congress anticipated that the business would continue to provide jobs, to satisfy creditors’ claims, and to produce a return for its owners. Congress presumed that the assets of the debtor would be more valuable if used in a rehabilitated business than if ‘sold for scrap.'” (United States v. Whiting Pools, Inc. (1983) 462 US 198.)