Which chapter of bankruptcy reorganization applies to a company?

Chapter 11 of the Bankruptcy Code is specifically designed for the reorganization of businesses and is often utilized by corporations facing financial distress. This chapter allows a company to continue operating while it develops a plan to restructure its debts and restore profitability. Under Chapter 11, the company retains control of its assets and is referred to as a "debtor in possession." This status enables the business to propose a reorganization plan to creditors, which may involve renegotiating the terms of debts, reducing obligations, or even selling some assets to improve cash flow.

In contrast, Chapter 7 involves liquidation, where a company's assets are sold off to pay creditors, often resulting in the end of the business. Chapter 13 is typically used by individuals with regular income, allowing for the development of a repayment plan to pay off debts over time, and is not suitable for larger businesses. Chapter 15 deals with cross-border insolvency issues and is primarily aimed at addressing cases involving international debts and multinational operations. Thus, Chapter 11 is the appropriate choice for companies seeking to reorganize rather than liquidate.