Definition of Chapter 11

Chapter 11 is the part of the Bankruptcy Code that provides for reorganization of a bankrupt company's assets.
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Chapter 7 is an altogether different process, which concludes with the liquidation of all company assets. In contrast, the goal of Chapter 11 is to put creditors on hold for a period of time while the firm reorganizes to survive as a going concern.

In Chapter 11, a reorganization plan is developed and must be agreed upon by key parties, such as lenders, shareholders and the appointed bankruptcy trustee.

In some Chapter 11 proceedings, creditors will take less money than they are owed or convert their debt instruments into equity holdings.

Chapter 11 References On This Site

These Gaebler.com articles mention this glossary term:

• Accounting Terminology for Entrepreneurs: G-L - An example of a hidden asset is United Airline's Mileage Plus, a program that is estimated to be worth about $15 billion, at the time when the company filed for chapter 11 bankruptcy...
• Should You Worry About Early Imitators? - Netflix disrupted Blockbuster’s movie rental business and essentially put them into Chapter 11 bankruptcy by pursuing a new business model for movie...
• How to File for Bankruptcy - Federal law generally allows for two different kinds of business bankruptcy: Chapter 7 and Chapter 11...
• How to File for Bankruptcy - Federal law generally allows for two different kinds of business bankruptcy: Chapter 7 and Chapter 11...
• Accounting Terminology for Entrepreneurs: G-L - An example of a hidden asset is United Airline's Mileage Plus, a program that is estimated to be worth about $15 billion, at the time when the company filed for chapter 11 bankruptcy...
• Should You Worry About Early Imitators? - Netflix disrupted Blockbuster’s movie rental business and essentially put them into Chapter 11 bankruptcy by pursuing a new business model for movie...