Kasen & Kasen, P.C.

A boutique bankruptcy law firm with a reputation for excellence



Chapter 11 Bankruptcy


High Income Earners
Chapter 7
Chapter 13
Chapter 11



It is a common misconception that only businesses can file for chapter 11 bankruptcy. In fact,individuals can file for chapter 11 bankruptcy too. Chapter 11, like chapter 13, provides are organization process for individuals. Individual chapter 11 cases are relatively uncommon and highly complex. The attorneys at Kasen & Kasen, P.C. have the unique distinction of regularly and successfully representing debtors in individual chapter 11 bankruptcy cases.

Why File an Individual Chapter 11 Case? The most common reason an individual might file for chapter 11 bankruptcy, as opposed to chapter 13, it that chapter 11 does not have any debt limitation eligibility requirements, whereas, chapter 13 does. Specifically, in order to be a chapter 13 debtor an individual must have less than $394,725.00 in unsecured debts and less than$1,184,200.00 in secured debts. * Chapter 11 has no such limitation.

* Note - this debt limitation is adjusted every three years to reflect changes in the Consumer Price Index



The Chapter 11 Plan. Chapter 11 provides both individual and business debtors with an opportunity to reorganize their financial obligations through a Chapter 11 plan outlining the terms that will form the bases for new contractual rights between the debtor an his/her/its creditors.


Chapter 11 Plan Confirmation. The goal in nearly all chapter 1 cases is to have the plan approved/confirmed by the Court. There are two alternative methods for confirming a chapter 11 plan: (1) the consensual method; and (2) the cram down method.



  • The Consensual Method. Under the consensual method, a chapter 11 Debtor can achieve confirmation by obtaining unanimous acceptance of his/her/its chapter 11 plan by all impaired classes of Creditors.
  • The Cram Down Method. The cram down method provides an alternative to Debtors who are unable to obtain unanimous acceptance by all impaired classes of creditors. Under the cram down method, a chapter 11 debtor can achieve confirmation by obtaining acceptance of his/her/its chapter 11 plan by at least one impaired class of creditors, provided the plan does not discriminate unfairly, and is fair and equitable with respect to each non-accepting impaired class of creditors.


The Importance of Voting. Voting is key in chapter 11, because chapter 11 debtors need at leastone impaired class of creditors to vote in favor of the plan in order to achieve confirmation. Inorder for a class to accept the plan, more than ½ of the class members and at least 2/3 in dollaramount must vote in favor of the plan



Common Confirmation Issues in Individual Chapter 11 Cases. Some common confirmation issues that come into play in individual chapter 11 cases are as follows:



  • The Best Interest Test. Under the best interest test, an impaired creditor who has not voted, or voted against the plan, must retain or receive property not less in value than that is the debtor were liquidated in chapter 7.
  • The Best Efforts Test. The best efforts test is only applicable to individual chapter 11 debtors. Under the best efforts test, if an unsecured creditor objects to confirmation and is projected disposable income to be received over the next five (5) years towards its plan payments.
  • The Absolute Priority Rule. The absolute priority rule only comes into play when a chapter 11 debtor is trying to achieve plan confirmation through the cram down method. Under the absolute priority rule, equity interests cannot be retained unless general unsecured creditors are paid in full.

*Note - There is a split of authority as to whether the absolute priority rule applies in individual Chapter 11 cases, Currently, there is no binding authority in the Third Circuit on the issue.



Contact the attorneys at Kasen & Kasen, P.C. to learn more about whether chapter 11 bankruptcy is right for you.


Kasen & Kasen, P.C.


Cherry Hill Office: 856-424-4144
New York Office: 646-397-6226
Philadelphia Office: 215-923-1665
Delaware Office: 302-652-3300
Florida Office: 856-424-4144


1874 Marlton Pike East, Cherry Hill, New Jersey 08003