Chapter 7 liquidates a debtor and winds it down; Chapter 11 reorganizes the business so it can continue or be sold; and Subchapter V is a streamlined Chapter 11 reorganization track for eligible small businesses. The chapter on a filing tells you the debtor’s intent — which is why reading it correctly is the fastest way to understand a case.
Chapter 7 — liquidation
A trustee is appointed, sells the debtor’s assets, and distributes proceeds to creditors by priority. The entity does not survive. When you read “Chapter 7,” read “wind-down.”
Chapter 11 — reorganization
The debtor usually stays in control as a debtor in possession and works, under court supervision, to restructure debts, sell assets, or sell the business as a going concern. The aim is continuity of value. A Chapter 11 case can convert to Chapter 7 if reorganization proves unworkable.
Subchapter V — streamlined Chapter 11
Subchapter V is a track within Chapter 11, created by the Small Business Reorganization Act of 2019 for eligible small businesses. It keeps the reorganization aim but strips out cost and procedure. A trustee is appointed to help reach a plan, while the debtor generally stays in possession. Read the statute on Congress.gov.
Quick comparison
| Chapter 7 | Chapter 11 | Subchapter V | |
|---|---|---|---|
| Goal | Liquidate | Reorganize / sell as going concern | Reorganize (streamlined) |
| Who runs the business | Trustee | Debtor in possession | Debtor in possession (with a facilitating trustee) |
| Typical size | Any | Often larger | Eligible small businesses only |
| Signal to a reader | Wind-down | Continuity attempt | Small business, continuity attempt |
The point that survives all three
Whichever chapter a company files, the case reaches the named debtor and its property. None of the three chapters draws in a separate entity, token, or network that did not file. The chapter tells you what the debtor is trying to do; it never expands who is inside the case.
For a Subchapter V case in practice, see reading the MVMT Labs Chapter 11 filing; for the stay that all three trigger, what is an automatic stay.
Frequently asked questions
What is the core difference between Chapter 7 and Chapter 11? Chapter 7 liquidates and winds down the debtor; Chapter 11 aims to reorganize or sell the business as a going concern.
Is Subchapter V better or worse than regular Chapter 11? It is neither — it is a streamlined Chapter 11 track available only to eligible small businesses, designed to make reorganization faster and cheaper.
Does the chapter change who is covered by the case? No. Regardless of chapter, the case and its automatic stay reach the named debtor and its property, not non-filing entities.
By David Cohen. Last reviewed 2026-07-22. General information about legal procedure, not legal advice.