Bankruptcy is a federal court process designed to help consumers
and businesses eliminate their debts, or repay them under the protection
of the Bankruptcy Court. A voluntary Chapter 11 filing is an action
taken by a company to resolve financial problems such as lack of
liquidity or excessive debt. During the Chapter 11 process, a company
is able to continue to conduct business while reorganizing its
finances and operations in order to pay the claims of those to
whom it owes money.
The goals of a company in Chapter 11 Bankruptcy are  to "reorganize" its
business and  to try to become profitable again. A company in Chapter 11 may
continue to sell goods, and to employ workers. It is also able to purchase on
open account terms, and to borrow money from banks.
A company exits Chapter 11 when the U.S. Bankruptcy Court has approved a Chapter
11 Plan of Reorganization, and the transactions and payments proposed in the
Plan are consummated. The U.S. Trustee will appoint one or more committees to
represent the interests of creditors and stockholders in working with the company
to develop a Plan of Reorganization.
Before the Chapter 11 Plan may be implemented, the debtor in possession must
send the creditors a court approved disclosure statement, and obtain acceptance
of the plan by its creditors. Even if pre-petition creditors vote to reject the
Plan, the Court can disregard the vote and still confirm the Plan if it finds
that the Plan treats creditors and stockholders fairly. A class of claims is
considered to have accepted a Plan if such a Plan has been accepted by vote of
creditors that hold at least two-thirds in dollar amount, and more than one-half
in number, of the allowed claims of that class.