Does Chapter 11 mean bankruptcy liquidation?
Chapter 11 means reorganization, not liquidation. The purpose of filing Chapter 11 protection is to reorganize and strengthen the company for the future. [Back to top] • Who can use Chapter 11? This Chapter of the Bankruptcy Code is available to a business suffering severe financial difficulty, but that can be viable if its debt repayments can be reduced or postponed. The business can be a corporation, partnership or sole proprietorship. Chapter 11 can also be used to liquidate the assets of the business and pay the creditors from the realization. Chapter 11 liquidation often will obtain a greater realization for the creditors than a Chapter 7 bankruptcy. [Back to top] • How is the business protected (Automatic Stay)? The business is protected by an automatic stay that takes place upon the filing of the petition. No creditor can take any action against the debtor. The stay provides a breathing spell for the debtor during which negotiations can take place to try to resolve the difficult
