Chapter 11 bankruptcy is typically filed by a company or organization when they need to undergo financial reorganization. While the company is still generating capital, bad investments or other operational issues, often place them in a position of financial distress. Filing Chapter 11 allows the business to restructure itself and evaluate its current holdings in an effort to recover from their current financial issues. Here are six other things you should know about Chapter 11.

Chapter 11 Bankruptcy

  1. Continued operations – One of the biggest benefits of filing for Chapter 11 is that a company or organization is still able to continue operations without facing issues from creditors or tax concerns.
  2. Slightly different from Chapter 13 – The key difference between Chapter 11 and 13 is the organization does not face a debt ceiling concerning how much they owe when filing Chapter 11. They are also typically able to retain a great deal of control over the legal proceedings
  3. Individual debtors – Chapter 11 is also available for individual debtors if their debt level exceeds what is allowed under Chapter 13.
  4. Legal representation – Having appropriate legal representation is imperative to keep petitioners aware of the protocols involved in the Chapter 11 filing process.
  5. Reorganization plan – This is a key component in filing for Chapter 11. The plan is crucial component in the success of the reorganization process and future growth of the entity or individual filing. This piece of the filing process also makes Chapter 11 far more expensive than Chapter 13 or 7.
  6. Creditors – As long as a creditor is listed on the debtor’s schedule, they are not required to file a claim and will receive a distribution. If a creditor is omitted from the schedule they are required to file a claim in the case.  

Filing for Chapter 11 bankruptcy is seldom on anyone’s list of planned business practices; however, it can be a useful tool to help an individual or company get out of a difficult financial situation. Due to the intricacies involved in Chapter 11 proceedings, it is imperative to hire qualified and trusted legal representation to ensure that the filing is drafted and presented correctly.

If you or someone you know is considering filing for Chapter 11 bankruptcy, contact the legal team at Penachio Malara, LLP for a free consultation. They have successfully represented clients in bankruptcy proceedings since 1991.


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We are a Debt Relief Agency. We Help People file for Bankruptcy under the Bankruptcy Code.


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