ABSTRACT
This type of bankruptcy is known as reorganization. Chapter 11 applies to businesses and Chapter 13 to individuals. Under Chapter 11, a company is allowed to reorganize and to continue operations under the court's jurisdiction while paying off a portion of its debt. The courts can discharge the debt that cannot be paid off. This type of bankruptcy significantly increases creditors’ chances of receiving some payment. The standards for paying the creditors are identical to those in Chapter 7. If the company were liquidated, there is a good chance the amount of money received would not be sufficient to pay off the creditors. But Chapter 11 enables a company to continue operations and continue making debt payments.
