Chapter 7 vs. 11? Most Businesses Don’t Need Either. 

For years, bankruptcy was seen as the only “serious” path when a business was overwhelmed by debt. But that landscape is shifting fast. 

According to S&P Global, nearly 63% of bankruptcy filings in 2024 were reorganizations, not liquidations. The trend is clear: companies want to survive, not shut down. 
But here’s the part most business owners don’t realize… 

Most are turning to bankruptcy to accomplish something they could achieve outside of bankruptcy — faster, cheaper, and with far fewer consequences. 

And that’s where restructuring outside of Chapter 7 or Chapter 11 becomes the smarter play. 

Why Businesses File Bankruptcy (and Why They Don’t Actually Need To) 

Bankruptcy filings are rising, up 13.1% year over year, and small business Chapter 11 filings under Subchapter V have increased as well. With high interest rates, tighter credit, rising labor costs, and cash constraints, many owners feel cornered. 

But here’s the thing: They’re choosing bankruptcy for the wrong reason. 

Most struggling businesses choose: 

Chapter 7 (Liquidation) 

Because it is: 

• Cheaper ($1,000–$3,000 in attorney fees) 

• Faster (a few months) 

• Simple (no multi-year court oversight) 

• Good for people who want a clean exit 

But many owners use Chapter 7 even when they don’t actually want to shut down — they just think it’s the only affordable way out of their debt. 

Chapter 11 (Reorganization) 

Typically used by: 

• Larger firms 

• Companies with cash flow 

• Owners who want to save the business 

But Chapter 11 is: 

• Very expensive ($15,000–$20,000+ just to begin, often hitting six figures) 

• Long (can take years) 

• Complex (lawyers, creditors’ committees, plan negotiations) 

• Risky (60%–90% of small business Chapter 11s fail and convert to Chapter 7) 

So why are owners picking these options? Because they don’t know a third option exists. 

What We Do Instead (And Why It Works Better) 

Our process achieves everything business owners want from bankruptcy without actually filing. 

If they want to save their company: 

We restructure: 

• Debt 

• Payments 

• Creditor relationships 

• Cash flow 

• Operations 

WITHOUT liquidation, bankruptcy court, or a years-long process. 

And unlike Chapter 11, our approach: 

• Costs far less 

• Moves faster 

• Has no public record which means no stigma 

• Keeps the business under their control 

• Actually addresses operational issues behind the distress 

This creates real turnaround, not a temporary patch like most “amend & extend” or Liability Management Exercise moves that AlixPartners warns about. 

If they want out completely: 

They don’t need Chapter 7 to shut the doors. 

We help owners exit: 

• Cleanly 

• Profitably 

• With less damage 

• Without court involvement 

Instead of throwing the business into liquidation, we structure a controlled, strategic exit that protects them financially. 

Here’s the message owners need to hear: 

Bankruptcy is not your only way out and it’s rarely your best way out. Before you file, talk to someone who can accomplish the same outcomes for a fraction of the cost, without destroying your business or your future options. 

Schedule a confidential call, and we’ll walk you through your options, including the ones bankruptcy attorneys don’t talk about. 
No pressure. No judgment. No courtrooms. Just clarity.