Chapter 11 is reorganization – much like modification of a loan. Chapter 7 is liquidation and dumping debt. Emerging from Chapter 11 is remarkable in an of itself, because most companies get pushed into Chapter 7 by their [stupid] creditors. It is better to reorganize the debt than to dump it – because forcing someone into Chapter 7 pays the creditors little to nothing even if there is money in the estate – because as everyone in the bankruptcy realm knows, the bankruptcy trustee, his attorneys and the administration get paid first and they usually fee crank all the money out of the debtor’s estate.
The debtor filed a Chapter 11 case immediately after a receiver was appointed in a state foreclosure proceeding. The mortgagee filed a motion to dismiss the bankruptcy case for cause.
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