It seems unfair when a company files chapter 11 they only have to pay back a portion of what they owe to creditors. is this true and how many time can you file bankruptcy until they say you can’t?
In Ch 11 the debtor (often a corporation, though Ch 11 is also available to individuals) must come up with a repayment plan that is acceptable to its 20 largest creditors and to the bankruptcy court.
Any creditor (person or business who is owed money by the debtor) can file an objection to the confirmation of the Plan. However, minor creditors are unlikely to prevail if the 29 largest creditors already agree to the Plan unless they have reasons strong enough to convince the court to reject the Plan proposed by the debtor.
Ch 11 is very complex, and if you intend to object to confirmation of a Ch 11 debtor’s plan, you really — trust me, REALLY – need an experienced attorney to represent you.
There is no limit to the number of times an entity can file Ch 11. However, the so-called "natural" limit comes into play when creditors no longer will agree to extend credit to a company because of its history of repeated Ch 11 bankruptcy filings.
