Chapter 7 and Chapter 11 Bankruptcy – Differences ?

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Five different kinds of bankruptcy cases cases are divided into two different types of bankruptcy cases:

  1. Liquidation – Chapter 7
  2. Reorganization – Chapters 9, 11, 12 and 13

According to investopedia

  • Chapter 7 bankruptcy is called liquidation bankruptcy.
  • Chapter 11 bankruptcy is called rehabilitation bankruptcy.

When a company is successful in Chapter 11 bankruptcy, it will typically be expected to continue operating in an efficient manner with its newly structured debt. If it is not successful, then it will file for chapter 7 and liquidate .  ( Shareholders will see little (if any) return on their investments)

[ What are the differences between chapter 7 and chapter 11 bankruptcy? ]

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