Chapter 11 Bankruptcy Definition

One of three bankruptcy options for small business, Chapter 11 is structured to allow the business to reorganize and become profitable again.

Chapter 11 Bankruptcy Expanded Definition
Unlike Chapter 7 (where the businesses assets are sold to pay off debt), Chapter 11 protects the business’s assets so that the company can reorganize and turn the business around.

The reorganization plan must be approved by the court, and the repayment of debt must be restructured. The plan might include the sale of some assets.

The business is closely observed by a court-appointed trustee to ensure that the plan is followed and successful.

Related Article
Making Heads and Tails of Small Business Bankruptcy

Last Updated By

Christan Neff | Apr 17, 2023

Check out Our Accounting Software

See a Demo

Back to Top