Final answer:
Chapter 11 bankruptcy allows companies to restructure their debts and operations, offering a flexible approach for corporate creditors and debtors to work together towards repayment, while keeping the business operational. The correct option is C.
Step-by-step explanation:
The type of bankruptcy that allows corporate creditors and debtors to remain flexible while working together is Chapter 11. The purpose of a Chapter 11 bankruptcy, also known as a reorganization bankruptcy, is to allow a company to restructure its debts and business affairs with a plan to repay creditors over time while still continuing to operate.
Companies use this option to restructure because it provides an opportunity to keep the business alive and pay back debts over a longer period, rather than liquidating assets and potentially ceasing operations as is typical in a Chapter 7 bankruptcy.