Facts About Chapter 11 Bankruptcy

chapter 11 bankruptcy concept

Bankruptcy comes in several different forms, intended for different circumstances and financial needs. Before you file, it’s important to assess which of the different types of bankruptcy is right for you. If you are a business or partnership, Chapter 11 could be the answer to restructuring your debt.

Familiarizing yourself with Chapter 11 bankruptcy facts is a good place to start when deciding whether or not Chapter 11 is for you, and if it is, how to go about the process.

Chapter 11 is a form of financial reorganization, so a company can continue to function while they adhere to debt repayment plans — sometimes, these filings can be more “strategic” than financial, as management may wish to reorganize for political reasons, as well.

    • Sometimes, individuals can file Chapter 11, although more typically, they file under Chapter 7. This unusual route can be pursued if the individual has significant earning potential, but massive debts, exceeding the limits in Chapter 7 and 13 case filings.


    • In 2013, there were a total of 8,980 Chapter 11 bankruptcies filed in the United States. That’s compared to the 728,833 Chapter 7 bankruptcies filed in the same year, and the 333,626 Chapter 13 bankruptcies.


    • The ultimate goal of filing a Chapter 11 bankruptcy is to become profitable, so a debtor’s first move is to renegotiate leases, contracts or other debts most times. Creditors have an increased incentive to work on new deals with debtors, because they would most likely get more of their money owed than they would under a Chapter 7 filing.


    • Chapter 11 isn’t just for big corporations. Small businesses, classified as having fewer than 500 employees, can also file under this chapter. Often, however, if making a profit does not seem feasible, small Chapter 11 claims will be converted to Chapter 7 cases.


  • In Chapter 11, the debtor normally remains in control of their estate, as opposed to a bankruptcy trustee taking over. Sometimes, a trustee can be appointed for a certain cause, or if it would be in the best interest for a creditor.


Getting Chapter 11 bankruptcy help from a bankruptcy attorney is important, but before you immerse yourself in the process, learning the Chapter 11 bankruptcy facts is essential!