Chapter 11 in context with Bankruptcy

Chapter 11 is a chapter of the United States’ Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States (akin to SICA in India). Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy (although liquidation can go under this chapter), while Chapter 13 provides a reorganization process for the majority of private individuals.

Why Chapter 11 was in news recently?

The name of Eastman Kodak was synonymous with almost everything related to photography till the digital camera came along. In early 2012, it had filed for Chapter 11 business reorganisation in the US Bankruptcy court in New York. Earlier, many companies have gone to same path and notable among them are General Motors and Chrysler, both of which emerged from Chapter 11 hibernation within a record 40 days or thereabouts. Please note that Chapter 11 is similar to BIFR of India, which is discussed in next note.