11 U.S.C. Section 1101 -- Chapter 11 Definitions

What Is Section 1101?

Section 1101 of Title 11 of the United States Code (Chapter 11 Definitions) is a foundational provision of the Bankruptcy Code. It defines terms specific to Chapter 11 reorganization, including the critical concept of 'debtor in possession' -- a debtor who continues to operate the business with the powers of a trustee.

Key Provisions of Section 1101

Key Chapter 11 definitions:

• 1101(1) -- Debtor in Possession: A debtor that remains in possession of its property and continues to operate the business. The DIP has the rights and powers of a trustee under the Code.
• Creditors' Committee: A committee of unsecured creditors appointed by the U.S. Trustee to represent the interests of all unsecured creditors. Typically composed of the 7 largest unsecured creditors willing to serve.
• Small Business Debtor: A debtor with noncontingent, liquidated debts not exceeding $7.5 million who elects Subchapter V treatment.

How This Affects You

The debtor in possession concept is what makes Chapter 11 unique:

• The business owner stays in charge (unlike Chapter 7 where a trustee takes over)
• The DIP has fiduciary duties to creditors and must act in the estate's best interests
• If the DIP mismanages the case, the court can appoint a Chapter 11 trustee under Section 1104

Related Bankruptcy Code Sections

Section 1101 works in conjunction with several other provisions of the Bankruptcy Code:

• Section 1181 -- Subchapter V modifications
• Section 1112 -- Removing a debtor in possession

Understanding how these sections interact is critical for anyone navigating the bankruptcy process, whether as a debtor, creditor, or attorney.