7 Stages of Chapter 11 Bankruptcy for a Business, From Petition to Confirmed Plan

The petition is the least consequential document a business files in Chapter 11, though it is the one most owners picture when they imagine the case. Everything that decides whether the company survives is filed after it, on a calendar that the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure fix with more precision than owners tend to expect, and several of those dates begin to run on the afternoon the case opens.

What follows is that calendar in the order a court encounters it. The stages overlap at the edges. The deadlines do not.

1. The First Day Is Decided by the Motions Filed Beside the Petition

A voluntary case for an LLC or corporation opens with the petition, and under Rule 1007(d) the debtor must file with it a list of the creditors holding the 20 largest unsecured claims, insiders excluded. The schedules and the statement of financial affairs come with the petition or generally within 14 days after it.

The motions filed the same day carry the operational weight. Bankruptcy Rule 6003 slows most of them. Within 21 days after the petition, the court must not grant a motion to use estate property (including a motion to pay a claim that arose before the filing), to incur other obligations, to employ a professional, or to assume a contract, unless relief is needed to avoid immediate and irreparable harm. That phrase is the whole of first-day practice.

Sections 1107 and 1108 let the debtor in possession keep operating by default, and yet the first three weeks are arranged so that almost nothing outside the ordinary course happens without a judge's signature, because the creditors who will bear the cost of a mistake have not yet had time to appear, hire lawyers, or read what the company intends to do with their collateral.

The filing fee is paid that day as well: $1,738 for a Chapter 11 case under the fee schedule in effect in September 2026.

2. Cash Collateral Decides Whether There Is a Business Left to Reorganize

Section 363(c)(2) says the debtor may not use cash collateral unless "each entity that has an interest in such cash collateral consents" or the court, after notice and a hearing, authorizes the use. For a company whose lender holds a lien on receivables, the balance in the operating account on the morning after filing may belong, in the only sense a court cares about, partly to someone else.

The hearing can be preliminary. Under 363(c)(3) the court may authorize interim use if there is a reasonable likelihood the debtor will prevail at the final hearing, and it must act promptly on the request. The lender may insist on adequate protection under 363(e), which tends to arrive as replacement liens, payments, or reporting duties in an interim order that is renewed, or is not.

Whether a merchant cash advance funder holds cash collateral at all turns on its contract, its UCC filing, and how a particular court reads both.

The owner who assumes the business may spend its receipts freely on the first morning has misread the statute. The owner who assumes the lender now controls every dollar has misread it too. A cash budget that has not been tested against the lender's likely objections is a wish list with a case number.

3. The Meeting of Creditors Is an Examination, and the Owner Is the Witness

Rule 2003(a) requires the United States trustee to call the meeting of creditors no fewer than 21 and no more than 40 days after the order for relief in a Chapter 11 case. The trustee presides. The meeting must include an examination of the debtor under oath.

For a business, that examination falls on whoever signed the schedules. In a small business case, section 1116 requires senior management and counsel to attend. A false answer given knowingly and fraudulently is a federal crime under 18 U.S.C. 152, and the schedules the witness is asked about were signed under penalty of perjury weeks earlier.

4. The Bar Date Turns a Creditor's Silence Into a Forfeiture

The court, not the statute, sets the deadline for proofs of claim. Rule 3003(c) does the rest: a creditor whose claim is not scheduled, or is scheduled as disputed, contingent, or unliquidated, must file a proof of claim, and one who fails to do so "will not be treated as a creditor for that claim for voting and distribution."

This is where the schedules filed in the first two weeks return with consequences. A funder listed as disputed has to come forward and prove its number. A funder listed as undisputed in a stated amount does not, and the debtor has conceded the figure unless it later objects.

5. Exclusivity Is a Monopoly on Proposing the Plan, and It Expires

For 120 days after the order for relief, under 11 U.S.C. 1121(b), only the debtor may file a plan. If the debtor files within that window, others remain shut out until 180 days pass without acceptance by each impaired class. Courts may extend both periods, but section 1121(d)(2) caps the first at 18 months and the second at 20 months after the order for relief.

A small business case that has not elected Subchapter V runs on a different clock: the exclusive period is 180 days, and the plan and any disclosure statement must be filed within 300 days. Subchapter V is stricter still, since only the debtor may ever file a plan there and it is due within 90 days of the order for relief, subject to extension only for circumstances the debtor should not justly be held accountable for.

6. The Disclosure Statement Must Satisfy a Reader Who Does Not Exist

Section 1125(b) forbids postpetition solicitation of votes unless creditors receive the plan or a summary together with a written disclosure statement the court has approved "as containing adequate information." The statute measures adequacy against a hypothetical investor in the relevant class, someone able to make an informed judgment about the plan. No actual creditor resembles that investor. Every disclosure statement is written for that investor anyway.

In a small business case, section 1125(f) lets the court find that the plan itself provides adequate information, or approve a standard form. Subchapter V ordinarily dispenses with a separate disclosure statement altogether. There are also cases in which votes were gathered before the petition was ever filed, though those belong to a different kind of Chapter 11.

7. Confirmation Is a Vote Count Followed by a Judge's Arithmetic

Under section 1126(c), a class of claims accepts a plan when creditors holding at least two thirds in amount and more than one half in number of the allowed claims actually voting say yes. Suppose seven of a class's twelve creditors return ballots, holding $840,000 in claims among them. The class accepts if creditors holding at least $560,000 and at least four of the seven vote in favor.

Section 1129(a) asks more. The court must find that each dissenting creditor in an impaired class receives at least what it would receive in a Chapter 7 liquidation. At least one impaired class must accept without counting insiders. The plan must be feasible, meaning confirmation is not likely to be followed by liquidation or a further financial reorganization. And every fee owed under 28 U.S.C. 1930 must be paid.

If every requirement is met except acceptance by every impaired class, section 1129(b) lets the court confirm anyway, provided the plan does not discriminate unfairly and is fair and equitable toward each dissenting class. For unsecured creditors, fair and equitable means payment in full or nothing retained by anyone junior to them, owners included.

Confirmation then discharges a corporate or LLC debtor from debts that arose before confirmation, under section 1141(d)(1), whether or not a creditor filed a claim or voted. A plan that liquidates substantially all the property of a business that then stops operating produces no discharge under section 1141(d)(3).

After confirmation the case does not vanish. Outside Subchapter V, quarterly fees payable to the U.S. Trustee continue until the case is closed, converted, or dismissed; under the schedule effective April 1, 2026, a quarter with disbursements between $62,625 and $999,999 costs 0.4% of those disbursements. A material default under the confirmed plan is cause, under section 1112(b)(4), for conversion or dismissal. The plan is a new set of promises. The old creditors are still the ones holding it.

Where a Settlement Review Fits Before Stage One

Some businesses belong on this calendar. A company facing a lawsuit it cannot answer, a lease it must leave, or a secured lender preparing to enforce needs bankruptcy counsel, and no settlement company substitutes for the automatic stay. Delancey Street is not a law firm; it does not file bankruptcy cases, appear in court, or give legal advice.

What Delancey Street offers is earlier and narrower: an initial look, confidential and without charge, at whether merchant cash advance and other business debts might be negotiated outside court, with independently licensed counsel involved when a legal question arises. For some owners that look ends at stage one above. For others the calendar never begins, which is its own outcome, and a quieter one.