A court-supervised process that lets a business, and sometimes an individual, keep operating while restructuring debt.

"Court-supervised" means the case is filed in federal bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code, and major decisions often need court approval. "Keep operating" means the debtor usually remains in control as a debtor in possession rather than shutting down immediately or handing everything to a trustee. "Restructuring debt" means proposing a plan of reorganization that can change payment schedules, reduce some obligations, sell assets, reject burdensome contracts or leases, and negotiate treatment of different classes of creditors. If the court confirms the plan, the debtor follows it to emerge on more stable financial footing.

For injured people, that practical effect can be significant. When an employer, property owner, trucking company, or product-related business enters Chapter 11, pending lawsuits may pause because of the automatic stay. That can delay settlement talks, discovery, and collection efforts, even when medical bills and wage loss are ongoing. A claim may also be treated as an unsecured debt unless insurance or other assets are available.

In Washington, Chapter 11 cases are handled in the U.S. Bankruptcy Court for the Western District of Washington or Eastern District of Washington, depending on where the debtor is based. If an injury claim is involved, deadlines set by the bankruptcy court - especially the bar date for filing a proof of claim - can be as important as the usual statute of limitations.