{"id":286894,"date":"2021-01-27T09:17:43","date_gmt":"2021-01-27T14:17:43","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/bankruptcy\/business-bankruptcy\/chapter-11-bankruptcy.html"},"modified":"2026-10-29T12:42:49","modified_gmt":"2026-10-29T17:42:49","slug":"chapter-11-bankruptcy","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/business-bankruptcy\/chapter-11-bankruptcy.html","title":{"rendered":"Chapter 11 Bankruptcy for Businesses"},"content":{"rendered":"\n
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Chapter 11 Bankruptcy for Businesses<\/h1>\n\n
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\n By Amy Vandervort-Clark, J.D.<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

Chapter 11 bankruptcy<\/span> is a legal process that allows businesses to reorganize their debts and get a fresh start<\/span> while continuing operations. When a company files for Chapter 11, it aims to create a repayment plan<\/span> that satisfies creditors and enables the business to recover financially. During this period, the company operates as a “debtor in possession<\/span>” (DIP), maintaining control of its operations under court supervision. Creditors owed money by the company must wait for the reorganization plan\u200b to be approved by the court, which may involve renegotiating debts or receiving partial repayments.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n

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The primary goal of Chapter 11 is to restructure<\/span> debt and create a path to profitability, distinguishing it from Chapter 7 bankruptcy<\/span><\/a>, which involves liquidating<\/span> the business’s assets.<\/p>\n

In this article, we\u2019ll explain how Chapter 11 <\/span>bankruptcy<\/span> procedures<\/span>\u00a0work. If you\u2019re considering a Chapter 11 <\/span>bankruptcy<\/span> case<\/span>, consider working with a local bankruptcy attorney<\/span><\/a> to ensure you\u2019ve considered all of your options and follow the right procedures to get court approval<\/span>.<\/p>\n

Who Can File for Chapter 11 Bankruptcy<\/span>?<\/h2>\n

Large corporations and partnerships<\/span> often use Chapter 11 bankruptcy<\/span><\/a>. The business owner in debt or its creditors can file for Chapter 11 bankruptcy<\/span>. If creditors file, it is an involuntary petition. For example, Bed Bath & Beyond filed for Chapter 11 bankruptcy<\/span> in April 2023, hoping to salvage the business by finding a buyer. Since then, the retailer has closed all its physical stores and now operates only online.<\/p>\n

Qualifying small businesses<\/span> can also file Chapter 11 plans<\/span>. The Small Business<\/span> Administration defines a small business<\/span> as one with fewer than 500 employees. However, some small-business<\/span> Chapter 11 bankruptcies<\/span> are dismissed and converted to Chapter 7. This often occurs because the U.S. court decides the company has little or no chance of becoming profitable.<\/p>\n

Sole proprietorships<\/span> and partnerships<\/span> can file for Chapter 11, but keep in mind that in both cases owners’ personal assets can be used to pay creditors.<\/p>\n

Small business<\/span> owners of real estate<\/a> can also file for Chapter 11. This often includes office buildings, warehouses, and shopping centers. This is a single-asset real estate case under Chapter 11 and involves debtors with:<\/p>\n