Chapter 11 bankruptcy is usually the type of bankruptcy filed by organization, like the recent Chapter 11 bankruptcy filed by Lehman Brothers. Chapter 11 bankruptcy allows an organization time to restructure its assets and attempt a profitable start.
Federal laws determine the laws of payment and further division of assets when an organization files for Chapter 11 bankruptcy. Secured creditors are the first to get back their money, bond holders are the next and shareholders of the company are the last to receive any kind of compensation.
Even after an organization has filed for Chapter 11 bankruptcy the company's securities may continue to trade. Reorganization of the company and a new start is the goal when an organization files for Chapter 11 bankruptcy, when that is doesn't work, the only other option is liquidation of all assets.