Chapter 11 bankruptcy is best described as:

Chapter 11 bankruptcy is best described as:

• A. It allows immediate liquidation of all assets.
• B. It discharges all debts immediately.
• C. It is a reorganization that allows continued operation and plan approved as fair and equitable.
• D. It is only for individuals, not corporations.

Answer: (C)

Chapter 11 is a reorganization process that lets a distressed business keep operating while it restructures its debts under court supervision. The debtor typically remains in control and proposes a plan that outlines how creditors’ claims will be satisfied or modified, with the goal of restoring viability. That plan is negotiated with creditors and must be confirmed by the bankruptcy court as fair and equitable before it becomes binding. This approach contrasts with Chapter 7, which involves liquidating assets to pay creditors, and with Chapter 13, which is an individual repayment plan. While Chapter 11 is commonly used by corporations, individuals with substantial debts can also file. The emphasis on continuing operations and a court-approved, fair plan is what makes this description the best fit.

Chapter 11 is a reorganization process that lets a distressed business keep operating while it restructures its debts under court supervision. The debtor typically remains in control and proposes a plan that outlines how creditors’ claims will be satisfied or modified, with the goal of restoring viability. That plan is negotiated with creditors and must be confirmed by the bankruptcy court as fair and equitable before it becomes binding. This approach contrasts with Chapter 7, which involves liquidating assets to pay creditors, and with Chapter 13, which is an individual repayment plan. While Chapter 11 is commonly used by corporations, individuals with substantial debts can also file. The emphasis on continuing operations and a court-approved, fair plan is what makes this description the best fit.