How Often Companies Survive Chapter 11
The success rate of companies surviving Chapter 11 bankruptcy can vary significantly depending on various factors, including the size of the business, the complexity of the case, and the specific reorganization plan.
General Success Rates
- Traditional Chapter 11: The baseline probability of confirming a plan in traditional Chapter 11 cases is only 32.9%. 1
- Subchapter V: Subchapter V cases are 21 percentage points more likely to have a plan confirmed compared to traditional Chapter 11 cases, with a faster confirmation process (24% faster). 1
- Post-Bankruptcy Survival: Subchapter V cases have a higher post-bankruptcy survival rate, with an estimated 22 percentage points increase in firm survival for cases with liabilities between $4 million and $11 million. 1
Notable Examples
Several well-known companies have successfully emerged from Chapter 11 bankruptcy, including:- General Motors: After filing for Chapter 11 in 2009, GM made significant changes, such as shedding several brands and focusing on innovation with new, fuel-efficient, electric vehicles, which helped the company rebound and regain profitability and market share. 56
- Delta Airlines: Emerging from Chapter 11 in 2007, Delta successfully merged with Northwest Airlines, expanded its global network, and invested in customer service improvements and technology upgrades, becoming one of the leading airlines worldwide. 56
- Marvel Entertainment: After emerging from Chapter 11 in the late 1990s, Marvel shifted its business strategy from merely publishing comic books to licensing and film production, leading to the hugely successful Marvel Cinematic Universe and its eventual acquisition by Disney in 2009. 56