If you are employed by a major corporation undergoing Chapter 11 bankruptcy, you may be relieved to find out that things aren’t necessarily as bad as you expect. Chapter 11 bankruptcy is a form of bankruptcy that results in reorganization, not liquidation. The difference between these two types of bankruptcy is key. Let’s spend a few minutes talking about why Chapter 11 doesn’t necessarily mean you’re losing your job!
Chapter 11: Reorganization
Under the standard reorganization provisions of Chapter 11 bankruptcy, it’s very common for entire branches of a corporation to be moved as an intact unit. Let’s say you’re in the accounting department for a major corporation undergoing Chapter 11 bankruptcy. Your accounting department won’t be liquidated, but instead, it could be sold to another company that is in need of an accounting department. Perhaps the purchasing company is expanding or needs to add an additional accounting department.
Perhaps you are a team member on the in-house graphic design department for your corporation. As it goes through Chapter 11 bankruptcy, your in-house graphic design department might be bought by an entrepreneurial manager who wants to start his own graphic design business. This manager can buy your talent and equipment from your current employer.
As you can see, Chapter 11 doesn’t mean you’re getting fired. It could even be a positive experience for you, though it’s certainly not good news for the company! When your employer files bankruptcy, you might find yourself bought out by another corporation, enjoying even better working opportunities!