In which chapter of bankruptcy can a company operate with pre-bankruptcy management while reorganizing its debts?

Chapter 11 of the Bankruptcy Code allows a company to continue operating under the same management while reorganizing its debts. This chapter is specifically designed for businesses seeking to restructure their obligations and return to profitability without losing control of their operations.

During a Chapter 11 proceeding, the existing management typically remains in place and works on a plan to reorganize the company’s finances, which must be approved by the bankruptcy court and, in many cases, by creditors. This allows the business to maintain operations and customer relationships while addressing financial difficulties, rather than liquidating its assets as would occur in a Chapter 7 bankruptcy.

Other chapters do not provide the same level of operational continuity for management. For instance, Chapter 7 involves the liquidation of assets where a trustee is appointed to oversee the sale of the company’s assets, making it unlikely for the existing management to retain control. Chapter 13 is aimed at individual wage earners, allowing them to repay debts over time while maintaining their personal property, which is distinct from a business context. Chapter 15 deals with cross-border insolvency cases and does not primarily focus on reorganization for companies operating solely within U.S. borders. Therefore, the ability for a company to operate under pre-bankruptcy management while reorgan