In the field of bankruptcy, chapter 11 refers to a specific type of bankruptcy proceeding, wherein a corporation or partnership proposes a reorganization plan and retains control over its operations. In most cases, a corporation exists as a separate entity from its shareholders, who effectively own the business. As such, Section 1107 of the Bankruptcy Code establishes the corporation as the “debtor in possession,” a designation that confers a number of legal rights and obligations.
According to the Bankruptcy Code, a debtor in possession fulfills many of the same duties as a fiduciary, including nearly all the responsibilities of a chapter 11 trustee. In addition to filing informational documents such as monthly operating reports, debtors in possession must examine and object to claims and account for property. Debtors in possession may also employ third-party individuals such as accountants and attorneys to help them file tax returns and other reports.
According to the Bankruptcy Code, a debtor in possession fulfills many of the same duties as a fiduciary, including nearly all the responsibilities of a chapter 11 trustee. In addition to filing informational documents such as monthly operating reports, debtors in possession must examine and object to claims and account for property. Debtors in possession may also employ third-party individuals such as accountants and attorneys to help them file tax returns and other reports.