Chapter 11 bankruptcy

Provision of US federal bankruptcy legislation allowing a company in debt to continue its business operations by means of a plan of reorganization, subject to certain statutory criteria.

When a company suffers financial difficulties it may consider filing a Chapter 11 bankruptcy at the bankruptcy court. In this way it may be able to return to trading as a viable concern, assuming it can reduce its debts with reorganization. The legislation exists because it is often more cost-effective, in both financial and human terms, to return a company to viability, saving jobs and assets, than to liquidate it. Cooperation between creditors, the company, and all other interested parties is vital to the successful outcome of a Chapter 11 bankruptcy.