For example, if a business owner continues to operate his or her company as a debtor in possession after receiving protection under Chapter 11, he or she remains in control of the business’ assets, but is obligated to administer them as a trustee working in the best interests of creditors. A business owner in this situation may not be able to pursue a course of action that deviates from the normal course of business without obtaining court authorization.
Another example involves the right of creditors in a Chapter 11 situation to access the written disclosure statement that a debtor typically submits to the court within 60 days of filing for Chapter 11 protection. The statement must provide information about reorganization plans sufficient to enable a creditor to make informed decisions going forward. Creditors are, however, obligated to abide by the terms of the automatic stay granted to debtors, during which all collection, foreclosure, or repossession efforts must cease, although certain circumstances may qualify the creditor to receive a court order authorizing relief from that stay.