Can a corporation file Chapter 11?

Yes. A corporation may file Chapter 11 either as a traditional Chapter 11 or, if eligible under the debt-limit and small-business definitions, as a Subchapter V case. Chapter 11 lets the corporation continue operating as a debtor-in-possession under § 1107, restructure its debts, and emerge under a confirmed plan. Confirmed plans bind shareholders, creditors, and contract counterparties under § 1141.

Do corporations get a discharge in bankruptcy?

Not in Chapter 7. 11 USC § 727(a)(1) limits the Chapter 7 discharge to individuals. In Chapter 11 corporations may receive a discharge under § 1141(d)(1), but § 1141(d)(3) denies discharge to a corporation when the plan is a liquidating plan, the corporation does not engage in business after confirmation, and the corporation would not be entitled to a discharge under Chapter 7.

What happens to shareholders in a corporate bankruptcy?

Equity is at the bottom of the priority order. Shareholders are paid only after all creditors are paid in full. In nearly every Chapter 7 corporate case and most Chapter 11 cases, creditors are not paid in full, so equity is wiped out under the absolute priority rule codified at 11 USC § 1129(b)(2)(B). Stock typically becomes worthless when the corporation files.

Are corporate directors personally liable in bankruptcy?

Directors and officers are generally protected by the corporate form but face personal exposure when they signed personal guarantees, when they violated fiduciary duty, when they failed to remit trust-fund taxes under 26 USC § 6672, or when they engaged in fraud. Bankruptcy trustees can sue former directors for breaches of duty under § 541 and applicable state law.

Can a corporation file pro se?

No. A corporation is an artificial entity and must appear in federal court through counsel. Filing a corporate Chapter 7 or Chapter 11 without counsel is grounds for dismissal. Officers, directors, and shareholders cannot represent the corporation in court even if they are licensed attorneys, unless they also represent the corporation in that role.

Corporation Bankruptcy - Chapter 7 and Chapter 11 for Corporations

Yes. A corporation is a 'person' eligible to be a Chapter 7 debtor under 11 USC § 109(b) and § 101(41). The case is a liquidation: a Chapter 7 trustee is appointed under § 701, collects and sells corporate assets, and distributes proceeds to creditors in the priority order of § 507. The corporation does not receive a discharge under § 727(a)(1).

Corporation Bankruptcy

Corporations can file Chapter 7 (liquidation) or Chapter 11 (reorganization) but NOT Chapter 13. Key differences from individual bankruptcy:

No discharge: Corporations do not receive a discharge in Chapter 7. The entity is simply liquidated and ceases to exist.
Chapter 11 discharge: A corporation can receive a discharge through a confirmed Chapter 11 plan, allowing it to continue operating.
No exemptions: Corporations cannot claim exemptions. All corporate assets are available to creditors.
Shareholder impact: In Chapter 7, shareholders lose their investment. In Chapter 11, equity may be wiped out under the absolute priority rule unless the plan provides otherwise.

Bankruptcy Tools Network:
Discharge Screener · Research Platform · Exemptions by State · Keep Your Car · Keep Your House · Bankruptcy Cost · File Without a Lawyer · Rebuild Credit · Buy a House After · Buy a Car After