United States Bankruptcy Code,

There are six types of bankruptcy,located under the Title 11 of the  United States Bankruptcy Code,

1. Chapter 7: basic liquidation for individuals and businesses.
2. Chapter 9: municipal bankruptcy.
3. Chapter 11: reorganization, is mainly used by business debtors, but sometimes by individuals also.
4. Chapter 12: rehabilitation for farmers and fisherman.
5. Chapter 13: rehabilitation with a payment plan for individuals with a regular source of income.
6. Chapter 15: other international cases.

Chapter 11 permits reorganization under the bankruptcy laws of the United States.This is available to every business, whether organized as a corporation or individuals, although it is mostly used by corporate people.Bankruptcy helps the debtor in a number of ways to restructure his/her business. A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business’ earnings. The court permits the debtor even to reject and cancel contracts.Court helps the debtors by protecting the business from other legal proceedings.

        In Chapter 11 debtors have the absolute right to propose a plan of reorganization for a period of time.After that time is over, creditors may also propose plans.These plans must satisfy certain criteria in order to be confirmed by the bankruptcy court.If a company’s stock is publicly traded,then a Chapter 11 filing causes it to be delisted from primary stock exchange(NewYork Stock Exchange(NYSE),the American Stock Exchange, or the National Association of Securities Dealers Automated Quotations (NASDAQ)).

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