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What is Chapter 11 Bankruptcy?
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy allows corporations or businesses to continue their normal operations while they restructure their finances so that they can repay creditors. It is believed that by allowing businesses to continue operation, the businesses will generate more revenue, which will allow them to repair their financial situation. Large, public corporations are not allowed to file for Chapter 11 bankruptcy. Often times, these organizations include utility companies and insurance companies. In these cases, companies must reallocate or redistribute funds to repay their creditors without the protection of the bankruptcy court. Chapter 11 bankruptcy may involve the liquidation of company assets, but in some instances companies are able to avoid this. Chapter 11 bankruptcy does not put the personal assets of company stockholders at risk.
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