What chapter of the US Bankruptcy Code allows business reorganization?

The chapter of the U.S. Bankruptcy Code that allows business reorganization is Chapter 11.

A Chapter 11 case is designed to let a business continue operating while it restructures its debts under court supervision. The debtor commonly remains in possession of its property and business operations, proposes a reorganization plan, and negotiates with creditors whose claims may be modified or reduced. A court must confirm the plan before it takes effect.

Chapter 11 is not limited to corporations. Partnerships, sole proprietorships, and some individuals can also use it, although the consequences differ depending on the debtor’s legal structure. Special small-business and Subchapter V procedures can streamline eligible cases.

Chapter 7 is primarily a liquidation chapter, not the ordinary business-reorganization choice. Chapter 13 generally provides an individual wage earner’s repayment plan, while Chapter 12 is tailored to family farmers and family fishermen with regular income. Chapter 11 can ultimately lead to a sale or liquidation, but its central purpose is reorganization.