Definition: A legal state of insolvency. A company deemed to be in this
condition may choose protection under the law to allow a chance to
reorganize (Chapter 11) or liquidate in an orderly fashion (Chapter
7).
A company deemed to be bankrupt may choose protection under the
law to allow a chance to reorganize (Chapter 11) or liquidate in an
orderly fashion (Chapter 7). In the past few years, the improper
use of the Bankruptcy Code's Chapter 11 provisions by larger
corporations has put companies in similar situations under strict
scrutiny. For this reason, it's recommended that you consult a
competent bankruptcy attorney in order to understand just what's
involved and to ensure you file all proper paperwork. Additionally,
you should plan on taking from two to four years to complete the
judicial cycle of Chapter 11 proceedings.