What about Bankruptcy Choices for Small Businesses? Businesses must choose among alternative types of bankruptcies, each of which corresponds to a different part, or chapter of the federal Bankruptcy Code. Businesses usually choose either Chapter 7 or Chapter 11. Occasionally Chapter 13 maybe available. Sometimes businesses can be involuntary drawn into bankruptcy by their creditors, who face stiff financial penalties if they initiate an involuntary bankruptcy for invalid reasons. Further, the choice between Chapter 7 and Chapter 11 is not necessarily permanent; once proceedings have begun, a case may be converted to a different chapter, under certain circumstances.