What Follows a Chapter 11 Petition: Automatic Stay, Creditor Votes, Confirmation

Chapter 11 of the U.S. Bankruptcy Code lets a business reorganize its debts while it keeps operating. The process usually involves a corporation or partnership, and it runs from a petition filed in federal bankruptcy court to a plan that a judge confirms.

The steps follow a set order under the Code and the Federal Rules of Bankruptcy Procedure. The dates, fees and voting rules below come from the federal courts, the U.S. Trustee Program and the text of the statute.

Filing the Petition and the Automatic Stay

A case begins with a petition filed in the bankruptcy court that serves the debtor’s domicile, residence or principal place of business. A petition may be voluntary, filed by the debtor, or involuntary, filed by creditors who meet certain requirements under sections 301 and 303 of the Code.

The debtor must also file schedules, a statement of financial affairs and related documents under Federal Rule of Bankruptcy Procedure 1007(b). The filing fee is $1,167 and the administrative fee is $571. Individual debtors may pay both in installments with court permission.

Unless the court orders otherwise, the schedules cover assets and liabilities, current income and expenditures, and executory contracts and unexpired leases. The filing fee may be paid in up to four installments, and the final one is due no later than 120 days after filing. A joint petition carries one filing fee and one administrative fee.

Filing also triggers an automatic stay under section 362(a), which halts collection actions by creditors on claims that arose before filing.

The stay covers judgments, collections, foreclosures and repossessions on claims that arose before filing. A secured creditor can ask the court for relief from the stay under section 362(d), for example when the debtor has no equity in the property and the property is not needed for reorganization.

Exclusive Filing Period
Except in small business cases, only the debtor may file a Chapter 11 plan during the first 120 days after the order for relief, and a court may extend that period for cause up to 18 months, under 11 U.S.C. section 1121.

Debtor in Possession and the Exclusive Period

When a company files voluntarily, it becomes the debtor in possession. It keeps its assets and runs the business, performing many of the functions a trustee would. Trustee appointments occur in only a small number of cases.

The debtor in possession must account for property, examine and object to claims, and file monthly operating reports. With court approval, it may hire attorneys, accountants and other professionals. A trustee can be appointed for cause, including fraud, dishonesty, incompetence or gross mismanagement.

Under section 1121(b), except in small business cases, only the debtor may file a plan during the first 120 days after the order for relief. Under section 1121(d), the court may extend that period for cause, but not beyond 18 months after the order for relief. The debtor also has 180 days to obtain acceptances of its plan, which can be extended to 20 months.

Creditors and other parties in interest may file a competing plan under section 1121(c) in three situations: a trustee has been appointed, the debtor has not filed a plan within 120 days, or the debtor has not filed a plan that each impaired class accepts within 180 days. Small business debtors have a longer exclusive period, 180 days, which the court may extend only as section 1121(e)(3) allows. The plan and any disclosure statement must be filed within 300 days after the order for relief.

The U.S. Trustee appoints a creditors’ committee, which ordinarily includes the holders of the seven largest unsecured claims. The committee consults with the debtor, investigates its conduct and helps formulate a plan. The U.S. Trustee also holds the section 341 meeting of creditors, where the debtor may be questioned under oath.

Disclosure Statements and Creditor Votes

Before creditors vote, the court must approve a written disclosure statement under section 1125 that gives enough information for creditors to judge the plan. In small business cases, the court may find that the plan itself contains that information, so a separate statement is unnecessary, and subchapter V cases generally do not require one.

Creditors whose rights are impaired vote by ballot. Under section 1126(c), a class accepts the plan when creditors holding at least two-thirds in amount and more than half in number of the allowed claims in that class vote yes. Unimpaired creditors are treated as accepting. At least one impaired class of non-insiders must accept the plan.

After the ballots are tallied, the court holds a confirmation hearing under section 1128.

After the court approves the disclosure statement, the proponent mails the plan or a summary, the approved statement, the voting deadline and related information to the U.S. Trustee and to creditors and equity holders. The debtor also sends a ballot, the objection deadlines and the confirmation hearing date.

Creditors whose claims are unscheduled, disputed, contingent or unliquidated must file a proof of claim to vote or receive distributions. Scheduled claims that are not listed as disputed, contingent or unliquidated do not need a proof of claim.

The Tests a Plan Must Pass for Confirmation

Section 1129(a) sets out the conditions for confirmation. The plan must be proposed in good faith and comply with the Code. The proponent must disclose who will serve as directors and officers after confirmation, along with any insider to be employed and that insider’s compensation.

The plan must also be feasible. Under section 1129(a)(11), confirmation must not likely be followed by liquidation or another financial reorganization of the debtor or its successor, unless the plan itself proposes one.

For each impaired class, the best-interests test in section 1129(a)(7) requires that every holder accept the plan or receive property, valued as of the plan’s effective date, at least equal to what it would get in a chapter 7 liquidation. Fees under 28 U.S.C. section 1930 must be paid or provided for on the effective date. Domestic support obligations that came due after the petition date must have been paid.

Priority claims follow their own rules. Administrative claims under section 507(a)(2) and (a)(3) must receive cash equal to the allowed claim on the effective date. Tax claims under section 507(a)(8) must be paid in regular cash installments over no more than five years from the order for relief.

When an individual debtor’s plan faces an objection from an allowed unsecured creditor, the plan must meet one of two tests. The property distributed on that claim must be worth at least the claim’s amount on the effective date. The alternative test requires property worth at least the debtor’s projected disposable income to be received during the 5-year period beginning on the date that the first payment is due under the plan, or the period the plan provides for payments, whichever is longer.

Confirmation generally discharges debts that arose before the date of confirmation.

Small Business and Subchapter V Cases

The small business case was created in 2005, and subchapter V was created in 2019. Each has its own eligibility tests and procedures.

A small business debtor must be engaged in commercial or business activity, other than primarily owning or operating a single piece of real property. Its combined secured and unsecured debts must be $3,424,000 or less as of the filing date, and at least 50 percent of those debts must arise from business activities.

Small business debtors must attach their most recent balance sheet, statement of operations, cash-flow statement and federal income tax return, or give a sworn statement explaining why they cannot. A creditors’ committee is not automatically appointed and is formed only on a showing of cause.

In subchapter V cases, a trustee is appointed and no examiners are appointed. Only the debtor may file a plan, and a separate disclosure statement is not required unless the court orders one for cause. A plan may be confirmed if all projected disposable income is paid into it for three to five years.

Quarterly Fees, Payment Rules and Discharge

Debtors pay quarterly fees to the U.S. Trustee Program. The Justice Department’s schedule for quarters beginning April 1, 2026 through December 31, 2030 sets a $250 fee for disbursements of $0 to $62,624. Disbursements from $62,625 to $999,999 pay 0.4%, from $1,000,000 to $27,777,722 pay 0.9%, and $27,777,723 or more pay a flat $250,000.

The Bankruptcy Administration Improvement Act of 2025, signed February 6, 2026, raised the fee percentage in the largest cases from 0.8% to 0.9%. Earlier schedules differed: the $325 to $30,000 range applied to calendar quarters from January 1, 2008 through December 31, 2017.

Payments must be made electronically through Pay.gov, since checks and money orders have not been accepted since September 30, 2025. Fees are due no later than one month after each calendar quarter ends. Failure to pay is cause for conversion or dismissal under section 1112(b)(4)(K).

Confirmation generally discharges debts that arose before the date of confirmation, under section 1141(d)(1). Individual debtors generally must complete plan payments first, and some debts, such as alimony, child support and certain taxes, are not discharged. Confirmation of a liquidation plan does not discharge a corporation or partnership.