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? ]

Like common stock, preferred stocks represent partial ownership in a company, each share of preferred stock is normally paid a guaranteed, relatively high dividend and has first right over common stock at the company’s assets in the event of bankruptcy.

• Preferred stock shareholders do not enjoy any of the voting rights of common stockholders.
• Preferred stock may carry superior priority over common stock in the payment of dividends and upon liquidation.
• Preferred stock may carry a dividend that is paid out prior to any dividends to common stock holders.
• The main benefit to owning preferred stock is that the investor has a greater claim on the company’s assets than common stockholders.