What happens to a CEO when their company files for Chapter 11 bankruptcy?
What happens to a CEO when their company files for Chapter 11 bankruptcy? Tim Cella used to work at several law firms When a company files for Chapter 11 bankruptcy, the CEO is likely to face a lot of scrutiny. They are often the most highly paid person in their organization, and will often be asked to answer for the failure of their business. This is especially true when the bankruptcy filing is unexpected—and unfortunately for CEOs, this happens quite often. When a company unexpectedly files for Chapter 11, shareholders are typically the first to demand that someone be held accountable. The immediate reaction is to look toward the top of the business structure, where they believe they will find accountability and leadership. But who is technically responsible when a company fails? If a CEO has been around for years and overseen multiple successful quarters, how much blame should they be held accountable for? When thinking about if a CEO should be held accountable in circumstanc...