If approved by a court it allows for protection from creditors seizing assets for a specified period of time. That time is used to re-organize the company. Contracts, pension funds, structure, size may all be modified. Usually there is an attempt to obtain interim financing (cash infusion against remaining assets). eg. Delta is seeking USD2 billion from GE Capital. The share price goes to zero and creditors usually get new shares (in what is essentially a new company) in exchange for debt relief. All subject to approval by creditors and the court.