Final answer:
Bankruptcy options for a company that cannot meet its debt obligations include Chapter 11, which allows restructuring while the company continues operations, and Chapter 7, which leads to liquidation of assets and business cessation.
Step-by-step explanation:
When a company cannot meet its debt obligations, it has several bankruptcy options. The most common type of corporate bankruptcy in the United States is Chapter 11, which allows the company to continue operations while reorganizing its debts under court supervision. This form of bankruptcy provides a way for companies to restructure their debt and develop an exit strategy, sometimes leading to a stronger financial position post-bankruptcy, as seen with the city of Detroit. Another option is Chapter 7, which involves liquidating the company's assets to pay creditors, ultimately leading to the cessation of business operations. Bondholders, particularly in cases where a corporate bond issuer fails to make payments, can instigate bankruptcy proceedings to recoup their investments.