Home >> Bankruptcy >> What is Chapter 11 bankruptcy?

We’ve all heard the phrase “too big to fail” and watched from the sidelines as major corporations—from General Motors to United Airlines—have re-started their businesses by restructuring the money they owe. These businesses reorganized under Chapter 11 of the U.S. Bankruptcy Code. 

So, what is Chapter 11 bankruptcy? And can it help your small business if you find yourself in too much debt? While it’s historically been complicated, a new law makes it easier for small business owners to take advantage of this type of restructuring. Read on to learn more.

What is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy is a process where a business works with the court to negotiate what is owed to creditors (banks, suppliers, and others), significantly reduce the financial burden of those debts, and come up with a payment plan agreeable to both parties. 

Historically, it’s a complex and significant process. But once completed, it provides businesses with the ability to stay open and recover, benefiting everyone at the table. Due to its complexity and cost, small business owners rarely took advantage of Chapter 11 and either struggled greatly to recover or went out of business altogether. But that’s all changing. 

The Small Business Reorganization Act of 2019

The US Small Business Reorganization Act of 2019 (SBRA) greatly reduced the complexity and cost associated with this process. Therefore, it’s something every business owner should understand regardless of their current circumstances.  

To help small business owners understand how bankruptcy works, how the SBRA changed the playing field, and how you can learn more as you navigate through challenging times, Alignable partnered with experts at Harvard Business School to create this learning center.

Here’s an introductory video created by the team at HBS.

Learn more

Find out more about the Small Business Reorganization Act of 2019, the differences between Chapter 7 and Chapter 11 bankruptcy, and how the process works by exploring some of the below content. We hope it helps you understand your rights and know that you have options, even after a challenging time.

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