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Other Chapters of Bankruptcy

Chapter 9

Chapter 9 is available exclusively to municipalities. The purpose of Chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan. The definition of “municipality” is broad enough to include cities, counties, townships, school districts, and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities, and gas authorities.

Chapter 11

Chapter 11 provides for reorganization, usually involving a corporation or partnership. People in business or individuals can also seek relief in Chapter 11. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements. In most instances, a written disclosure statement and a plan of reorganization must be filed with the court. The disclosure statement is a document that contains information about the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization. The contents of the plan must include a classification of claims and must specify how each class of claims will be treated under the plan. In the case of individuals, Chapter 11 bears some similarities to Chapter 13. In most cases, there is no Trustee appointed; instead, the debtor remains in control of the bankruptcy estate (called the “debtor in possession”). The U.S. Trustee will monitor the debtor’s compliance with reporting requirements. The debtor in possession may, with the court’s approval, employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during the bankruptcy case.

Chapter 12

Chapter 12 is designed for “family farmers” or “family fishermen” with regular annual income. Chapter 12 enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. The plan, which must be submitted to the court for approval, provides for payments of fixed amounts to the trustee on a regular basis. The trustee then distributes the funds to creditors according to the terms of the plan, which typically offers creditors less than full payment on their claims. The repayment plan is generally three years long, but the court may approve a longer period up to five years for cause.


Knoxville Family Law Attorney