In a Chapter 11 bankruptcy, what must be prepared to outline repayment of debt?

In a Chapter 11 bankruptcy, the Plan of Reorganization is a critical document that outlines how the debtor will repay or restructure their debts. This plan serves as a blueprint for the financial rehabilitation of the bankrupt entity. It details the proposed method of repaying creditors, which often includes restructuring terms that may involve extending payment periods, reducing the amount owed, or changing interest rates.

The Plan must be approved by the court and voted on by creditors, which means it must balance the interests of various stakeholders while ensuring the feasibility of the proposed repayment terms. A well-constructed Plan of Reorganization is essential for the successful emergence of the debtor from bankruptcy, as it allows the business to continue operations while addressing financial obligations.

In contrast, the remaining choices serve different functions in the bankruptcy process. A Proof of Claim is a document that creditors submit to assert their rights to receive a payment from the bankruptcy estate, but it does not outline repayment terms. A Notice of Automatic Stay informs parties involved that legal actions against the debtor are halted, protecting them during the bankruptcy process but not detailing repayment strategies. A Debt Recovery Plan, while it sounds similar, is not a standard term used in the context of Chapter 11 bankruptcies and does not serve the formal purpose that