Chapter 11 Bankruptcy

Chapter 11 Bankruptcy is for any business to reorganize. Unlike chapter 7 this type is open to corporations. In this case the business can continue to operate. The company will most likely be overseen by the court.

The rational behind chapter 11 is that sometimes it is more economical for a business to continue to operate than to have the parts sold off. All the creditors will get ownership of the newly reorganized company as a repayment for the debts that were erased.

With this type of bankruptcy companies can come out within months or years depending on the size of the company. The company must come up with a plan like with Chapter 13. An automatic stay is granted right after filing for chapter 11. Also if a company decides to undergo a chapter 11 their stock will be delisted from the NYSE and the NASDAQ.