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When a public company files for bankruptcy, everyone with a stake in the company, from employees to creditors to bondholders, is concerned about the future of the company and the outcome of the bankruptcy proceeding. As a result many tend to wonder who protect the shareholders interests and whether the old securities have any value when and if the corporation is restructured. Corporate bankruptcy refers to the legal filing process undertaken by businesses that have been overtaken by their debts.

Federal bankruptcy laws govern how companies go out of business or recover from huge dangerous debt crisis. A bankrupt company, the -debtor might use Chapter 11 of the Bankruptcy Code to restructure its corporation and try to become cost-effective again. Management continues to run the day-to-day business operations but all important business decisions must be approved by a bankruptcy court.

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