Which bankruptcy chapter is generally used by businesses?

Chapter 11 bankruptcy is specifically designed for businesses that need to reorganize and restructure their debts while continuing to operate. This type of bankruptcy allows a company to create a plan to regain profitability while it is protected from creditors. Unlike Chapter 7, which involves liquidation of assets, Chapter 11 provides businesses the opportunity to come up with a viable plan to pay off debts over time, making it a suitable option for corporations, partnerships, and other business entities looking to stabilize their financial situation.

In Chapter 11, a debtor can retain their business control during the process, known as "debtor in possession," while employees and suppliers can continue to conduct business as usual, which is essential for the ongoing operations of a business. This chapter is primarily utilized by businesses seeking to successfully navigate out of financial distress without ceasing operations.

Other chapters, such as Chapter 7 and Chapter 13, are typically more suitable for individuals rather than businesses, focusing on different aspects of debt relief and liquidation. Chapter 12, on the other hand, is intended for family farmers and fishermen, providing them with a specific framework that differs from the general approach of Chapter 11 for businesses.