There are many different types of plans. They will very, depending on many different things, and whether the debtor is an individual, partnership, or corporation.

Individual Debtor Plans

      The most common individual Chapter 11 debtor is the time-honored reorganization. Hope springs eternal in the hearts of the downtrodden debtor. The debtor wants to keep everything he has, exempt and nonexempt, and believes that with just "a little more time", he will be able to banish his financial demons. His plan often provides that he will:

Remain in possession and operation of his business and property Make up delinquent mortgage and other secured debt over a 3-5 year cure period Pay past due priority taxes over a 5-year period with interest as required by law Pay some type of relatively nominal, say 1-10%, dividend to unsecured nonpriority creditors by future pro rata quarterly payments over a 5-year period Fund the plan payments via future business operations and income, possible borrowings, and/or the sale of his business and/or property as needed

Corporate Debtor Plans

      In a typical corporate Chapter 11 debtor plan, similar provisions appear, with a further clause stating that the existing equity security holders (shareholders) shall retain their interests in the company. In other words, the debtor company will keep operating as it has in the past, with maybe a few minor tweaks, and will unburden itself from the suffocating debt load that prompted the petition for relief. There are of course a wide array of variations from this theme, including sale or merger of the business, liquidation of all assets, or other treatment.

Creditor Plans

      A typical creditor plan, on the other hand, is not so forgiving or sentimental as the usual debtor plan. It will usually have a provision for the sale of the debtor's business as a going concern within a relatively quick period, immediate payoff of secured debt from the proceeds of the sale, perhaps some nominal payment to unsecured creditors via a "carve-out" from the secured creditor's collateral, a cessation of the debtor as a going concern and cancellation all of the equity securities. In other words, adios debtor, it has been nice knowing you.