Here are the 2 types of corporate bankruptcy under U.S. law.
- Chapter 11 bankruptcy, allows a company to continue to operate as it sheds debts and contracts it can not afford.
- Chapter 7 bankruptcy, the company goes out of business fairly rapidly as its assets are sold off to try to satisfy its creditors.
[ Via CNN Money FAQ ]
Collapse of one of the world’s largest investment bank, Lehman Brothers has triggered large stock market falls around the globe. Wall Street has seen its worst day since 2001 amid fears about the stability of the financial system.
158-year-old bank Lehman Brothers, announced it was filing for Chapter 11 bankruptcy in the United States.
Five different kinds of bankruptcy cases cases are divided into two different types of bankruptcy cases:
- Liquidation – Chapter 7
- Reorganization – Chapters 9, 11, 12 and 13
According to investopedia
- Chapter 7 bankruptcy is called liquidation bankruptcy.
- Chapter 11 bankruptcy is called rehabilitation bankruptcy.