Chapter 11 is a bankruptcy reorganization available for certain individuals and all types of businesses.MoranLaw: Chapter 11 It allows businesses to maintain possession over their assets while creating a reorganization plan and puts collections and repossessions on hold.
Chapter 11 is a very flexible bankruptcy option, but it also has a low success rate.Slate: What Happens in Chapter 11 Bankruptcy? Chapter 11 is an alternative to Chapter 7 bankruptcy, which may require that certain assets be liquidated in order to pay creditors. Chapter 11 is also an option for high income individuals who do not qualify for Chapter 7 bankruptcy protection.http://www.nolo.com/legal-encyclopedia/article-29907.html
Chapter 11: Bankruptcy Restructuring
Chapter 11 bankruptcy allows a company to continue as a going concern after restructuring its debt. This form of bankruptcy is appropriate for companies whose assets are worth more as part of a business than they would be as part of a liquidation. It also gives the company a chance of future success, as it is possible that the restructuring will allow them to become profitable and competitive in the future.
Chapter 11 Bankruptcy Success Rate
From the early 1980s to the early to mid 1990s, the success rate of Chapter 11 bankruptcy restructurings nearly doubled. However, the number of companies that successfully emerged from a Chapter 11 filing during this time period was still just around 27 percent.http://www.justice.gov/ust/eo/public_affairs/press/docs/pr020998.htm While that is old news, Chapter 11 bankruptcies still don't frequently yield extremely positive long term results. In fact, some lawyers have trouble naming a single company that has ever emerged from a Chapter 11 filing with a truly bright future.http://newsburglar.com/2008/12/15/does-chapter-11-bankruptcy-work/
Companies That Have Filed Chapter 11
Many well known companies have declared Chapter 11 bankruptcy over the years. Texaco, Inc. declared Chapter 11 in 1987 and Financial Corp. of America went through the process in 1988. 2001 saw Pacific Gas and Electric Co. and Enron Corp., and 2002 was the filing year for Worldcom Inc., Conseco, Inc. and Global Crossing Ltd. Both Refco Inc. and Delta Air Lines, Inc. fell on hard times and declared in 2005. 2008 definitely wasn't the year for banking, and Lehman Brothers Holdings Inc. and Washington Mutual filed Chapter 11 bankruptcy. General Motors Corporation and Chrysler also had very public Chapter 11 proceedings in 2009 as US automakers struggled.http://nyse-trade.com/httpnyse-trade-ru10-krupnejshix-bankrotstv-v-istorii-ssha/
In addition to branded corporations, high profile businessmen have also been involved in Chapter 11 filings. One notable repeat filer of Chapter 11 bankruptcy is Donald Trump on behalf of his casino and entertainment businesses.http://blogs.wsj.com/bankruptcy/2010/02/26/trump-says-bankruptcy-is-not-part-of-his-brand/
Disclaimer
The content on this page is not a substitute for legal advice. Consult a legal professional before filing for Chapter 11 bankruptcy.
References
Fast Facts
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Chapter 11 is an attempt for businesses to become profitableSEC.gov: Corporate Bankruptcy
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Filer can create a reorganization plan for creditorsSEC.gov: Corporate Bankruptcy
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