The major difference between Chapter 7 and Chapter 11 is that:

Question

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The major difference between Chapter 7 and Chapter 11 is that liquidation automatically occurs in Chapter 7 but may or may not occur under Chapter 11. Chapter 7 is the traditional liquidation bankruptcy, where the debtor's assets are liquidated to pay off debts. In contrast, Chapter 11 is a reorganization bankruptcy where the debtor works to restructure its operations and repay its creditors over time. Therefore, option A and B are incorrect. Option D is also incorrect as there are administrative and legal costs incurred in both Chapter 7 and Chapter 11 bankruptcy proceedings. Option E is incorrect as Chapter 11 bankruptcy can be either voluntary or involuntary.

The Major Difference Between Chapter 7 and Chapter 11 Is