Chapter 11, in bankruptcy lingo, is the "reorganization" Chapter. Its biggest virtue is its flexibility. Its biggest drawback is its expense (which is a product of its flexibility). In certain situations, particularly where an individual is ineligible for Chapters 7 and 13, or where its flexibility is needed, it should be considered. The following discussion is a very brief overview of some aspects of Chapter 11 that may be of the most interest to an individual contemplating Chapter 11.

Like the other Chapters, an estate is created upon the filing for Chapter 11 which consists of all of the filer's assets (including earnings from services performed by the filer after the case is filed (§1115(a)(2)), although unlike Chapters 7 and 13 there is no trustee. Instead, the filer assumes the responsibilities of a trustee (as what is called a "debtor in possession" or "DIP" for short). A court can, however, for cause, including mismanagement of assets, appoint a Chapter 11 Trustee (or convert a case to Chapter 7) over the filer's objection.

Under Chapter 11 the filer's unsecured creditors can form a committee (typically consisting of 3 to 7 members drawn from among the filer's 20 largest unsecured creditors), which then has official standing in the case. Among other things, the committee can engage counsel (which becomes an expense that must be paid by the filer). The committee represents the interests of the entire class of unsecured creditors in negotiating a plan with the filer and responding to matters which come before the court while the case is pending.

Like Chapters 7 and 13, there is a first meeting of creditors (although it is conducted by the Office of the United States Trustee, rather than a "panel" trustee). Pending plan confirmation and the entry of a final decree, the filer must file monthly operating statements (and pay a fee to the Office of the United States Trustee on a quarterly basis based on the total amount of his quarterly disbursements).

The goal of a Chapter 11 case is to propose a repayment plan. Unlike Chapter 13, creditors who are impaired by a plan (i.e., creditors whose claims are modified or changed in any fashion) are entitled to vote on the plan. If the creditors vote against the plan, it cannot be approved unless the requirements for "cram down," are satisfied.

Like Chapter 13, most secured claims (other than a claim secured only by a mortgage in the filer's principal residence) may be modified (by bifurcating the claim into secured and unsecured parts), modifying interest and modifying the repayment term. The requirement for "cramming" a plan down against secured creditors requires that the plan be feasible and that it pays the secured creditor the full value of its secured claim with interest.

Similarly, unsecured creditors can be paid less than in full provided that, if they vote against the plan, they be paid at least as much as they would have received in a Chapter 7, and, further, receive at least as much as they would have received under a 5 year plan under Chapter 13. See §1129(a)(15).

One issue that existed under pre-BAPCPA law was whether a filer who retained exempt property could cram a plan down against unsecured creditors. See, e.g., In re Bullard, 358 B.R. 541 (Bankr. D. Conn. 2007). Although BAPCPA makes clear that a filer may, at least, retain post-petition assets, see §1129(b)(2)(B)(ii), as discussed in Bullard some commentators have suggested that this provision extends to all assets. Of course, the right to retain the assets would be subject to the filer otherwise complying with all the requirements for plan confirmation (which, as noted above, includes paying to unsecured creditors at least as much as they would have received under a Chapter 13).

Other provisions unique to individuals in Chapter 11 are:

• §1112(b)(4)(P) provides that a filer's failure to pay post-petition domestic support obligations is cause for dismissal or conversion, and §1129(a)(14) conditions confirmation on the filer being current with all such obligations.
  
  
• §1141(d)(5)(A) provides that there is no discharge for an individual Chapter 11 filer until he has completed all payments under the plan (unless creditors have received at least as much as they would have in a Chapter 7 and there is the lack of a practical ability to modify the plan).