Chapter 11 Bankruptcy for Small Businesses

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Chapter 11 bankruptcy is a type of reorganization bankruptcy often used by large corporations and businesses. Because Chapter 11 can be expensive, time-consuming, and complex, small businesses often opt to use other forms of bankruptcy.

Chapter 11 is the only bankruptcy option, however, for a small business seeking to restructure and continue in operation if it is owned by a partnership, limited liability company, or corporation. (Chapter 13, the other reorganization bankruptcy, can only be filed by individuals.) In addition, because your debts must be under certain limits to file for Chapter 13, if you owe lots of money to creditors, Chapter 11 may be your only way to file for bankruptcy and stay in business.

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