reorganization plan(redirected from Plan for Re-Organization)
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In chapter 11 bankruptcy, a plan filed with bankruptcy court describing the process of how an insolvent company will change structurally to help it pay its debts and stay in business. This plan is subject to court oversight to ensure enforcement. Depending upon the specific plan, a company's original owner or managers may maintain control. Other times, the company's creditors become the new owners of the business; this especially happens when one or more creditors have had their debt completely discharged. Changes also must occur structurally, perhaps in risk management or marketing or perhaps in something more fundamental, to ensure that the bankruptcy does not repeat itself.
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A plan filed with a bankruptcy court judge by a company in Chapter 11 proceedings in which the disbursement of assets is stipulated. The plan must be approved by the firm's creditors and by the court. A reorganization plan results in new securities being given to creditors in trade for old securities.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.