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The Purpose of Chapter 11 and Eligibility

Although Chapter 11 is generally associated with corporate debtors or other commercial entities such as partnerships or associations, it may be used by individuals as well.  See Toibb v. Radloff, 501 U.S. 157 (1991).  The goal of a Chapter 11 case is the rehabilitation of the debtor.  By filing a Chapter 11 petition, the debtor is able to continue the operation of its business under the shelter of the automatic stay.  The debtor can preserve its profitable activities and assets while it negotiates with creditors and develops a strategy for the satisfaction of debts and the revitalization of its failing enterprise.  If the negotiations are successful, the debtors crafts a plan of reorganization for its rehabilitation.