What are the types of bankruptcies?
Minneapolis Bankruptcy attorney Steven Silton discusses chapter 7 and chapter 11 bankruptcy.
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Well, there’s a number of types of bankruptcy, but as it relates to businesses, there are really two types of bankruptcies that will be specifically available to a business that needs help. And those would be Chapter 7 bankruptcy which is what’s commonly known as a liquidation. In Chapter 7 bankruptcy, a business would file bankruptcy. Their assets would then be controlled and monitored by a court-appointed Chapter 7 trustee, or a Chapter 11 bankruptcy. And a Chapter 11 bankruptcy can be one of two processes. You can have what’s called a reorganization process in which all of the contracts of the business are cancelled, and a plan of reorganization is proposed and voted on by creditors which would enter into new agreements with existing creditors, or you can have a Chapter 11 liquidation, where the debtor actually liquidates their assets pursuant to court supervision.