Chapter 11 Bankruptcy – Reorganization
When the business owner is not ready to give up on the business, Chapter 11 may be the best option. Although Chapter 11 is more commonly used by larger companies, it can be used by individual business owners, partnerships, LLCs, and small corporations who are confident the business will succeed if certain changes are made.
The disadvantage of choosing to file under Chapter 11 is the increased scrutiny that comes with it. The court-appointed bankruptcy trustee will closely monitor the business as it reorganizes and moves forward. If the trustee is not convinced the company is moving in the right direction, they can have the court convert the filing to a Chapter 7 or 13, or ask the court to dismiss the filing altogether.