What happens if a company files for Chapter 11 bankruptcy?

Companies that file Chapter 11 do so in order to obtain time to reorganize and make a fresh start. During a Chapter 11 proceeding, the court will help a business restructure its debts and assets. In most cases, the company can continue to operate. Many large U.S. companies have filed for Chapter 11 bankruptcy at one time or another to stay afloat.

What is Chapter 11 bankruptcy?

Chapter 11 is a section of the bankruptcy code that permits individuals and businesses to either liquidate or reorganize debt. Distinct from Chapter 7 and Chapter 13 bankruptcy cases, Chapter 11 typically involves greater sums of money regarding the assets and debts of the individual or business. Who Can File for Chapter 11 Bankruptcy?

Are small businesses eligible for Chapter 11 bankruptcy?

Small business owners may be eligible for a more streamlined and affordable approach to Chapter 11 bankruptcy under Subchapter V. This type of bankruptcy allows a business to reorganize and restructure its finances under the supervision of the bankruptcy court.