Bankruptcy is generally a reorganization of a company's financial affairs and begins when a company files a petition with the U.S. Bankruptcy Court. After the petition is filed, the company, now referred to as the "Debtor" usually continues to operate and controls the administration of its affairs.
The Bankruptcy Code protects the Debtor with an automatic stay against creditors actions, meaning that creditors owed money at the time the bankruptcy is filed are, under most circumstances, denied the right to enforce payment until the Debtor has emerged from the bankruptcy. A Plan of Reorganization is usually filed with the court which outlines how the Debtor intends to restructure its business, pay its debts and emerge from bankruptcy.
A Plan of Reorganization does nothave to provide for the full payment of all pre-petition bankruptcy debt.
Some companies enter and exit bankruptcy within a reasonable time period, while others remain in bankruptcy for many years. Information regarding a particular bankruptcy case can be obtained from the Debtor, its counsel, a creditors' committee, or a trustee if appointed.