As a quick interlude, since this may be confusing to non-US readers: bankruptcy in the United States in the context of business usually refers to two concepts,

As a quick interlude, since this may be confusing to non-US readers: bankruptcy in the United States in the context of business usually refers to two concepts, whereas in many other countries it refers to just one. There are two types of bankruptcies in the US used most often by insolvent businesses: Chapter 7, and Chapter 11. A Chapter 7 bankruptcy is what most people in other countries think of when they hear "bankruptcy" - it's the total dissolution of a business and liquidiation of its assets to satisfy its creditors. A business does not survive a Chapter 7. This is often referred to as a "bankruptcy" or "liquidation" in other countries. A Chapter 11 bankruptcy, on the other hand, is a process by which a business is given court protection from its creditors and allowed to restructure. If the creditors are satisfied with the reorganisation plan (which may include agreeing to change the terms of outstanding debts), the business emerges from Chapter 11 protection and is allowed to continue operating. Otherwise, if an agreement can't be reached, the business may end up in Chapter 7 and get liquidated. Most countries have an equivalent to a Chapter 11, but the name for it varies widely. For example, Canada calls it a "Division 1 Proposal," Australia and the UK call it "administation," and Ireland calls it "examinership." Since there's a lot of international visitors to HN I just thought I'd jump in and provide a bit of clarity so we can all ensure we're using the same definition of "bankruptcy." A US Chapter 7 bankruptcy is not a plan, it's the game over state. A US Chapter 11 bankruptcy, on the other hand, can definitely be a strategic maneuver when you're in serious trouble, so it can be part of the plan (hopefully far down the list).