Question of the day
2026-07-05
What is the core difference between Chapter 11 and Chapter 7 bankruptcy?
Answer it out loud first — like you would in the room. Then check yourself:
Reveal the model answer
Model answer
Chapter 11 is a reorganization: the company stays in business as a going concern, restructures its balance sheet and obligations under court supervision, and emerges via a plan of reorganization. Chapter 7 is a liquidation: operations cease, a trustee is appointed to sell off the assets, and proceeds are distributed to creditors by priority. RX bankers spend most of their time in Chapter 11 because preserving going-concern value almost always yields higher recoveries than a piecemeal liquidation.
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