How Much Does It Cost to File Chapter 11 Bankruptcy in 2026?

Chapter 11 is expensive. That’s the joke, or at least that part of it. A business is usually short of cash when it files a bankruptcy case, and the fees in the bigger cases can run into the eight figures. Occasionally into the nine. The business will end up paying varying amounts of that, depending on how the case plays out. So how much should you budget?

More than likely, most of it will go to the professionals. If your case is large enough to have an investment banker, you’ll also have a financial advisor and lawyers, all of whom are pricey.

Bankers’ fees get more complicated as cases get bigger. Unless your case is very straightforward, there’s no way for the professionals you’ll have to hire to know exactly how your case will develop. You may end up paying a flat monthly rate, a flat restructuring (success) fee, an asset sale fee that’s a percentage of any sales, and financing fees at various percentages (less for advising on exit secured debt, more for exit unsecured debt). There will be expenses such as travel and meals, too.

The total price tag of a bankruptcy varies widely depending on the case. In addition to its size, the fee can also be affected by whether the case is a pre-pack or pre-negotiated, a sale of large amounts of assets during the proceeding, and other factors that can add complexity to a bankruptcy, such as tort litigation or a complex capital structure with many different types of creditors that can add to the length of the case. Length matters on its own: a short case costs less than a long one. So does style: even a big case might be a quick agreed one, or it might be an extended battle, with mixed results. The more complicated the case, the more you’ll pay in professionals’ fees.

Filed a Pre-pack

Pre-packs have been increasing over the last 10 years, in part due to fees. In a pre-pack, the company and enough of its creditors agree on a plan before it files. Creditors can look at a case that will drag on for a year or two and know that professional fees are going to continue to rack up and even if they ultimately get a good recovery, it might be an empty win. Carestream Health filed a pre-pack, confirmed its plan in about 30 days, and its final fee application was $6.89m, to banker Houlihan Lokey. These smaller pre-packs are generally fairly straightforward, and so the bulk of the banker’s fees would be a flat fee for completing the restructuring. The catch: You’d need enough creditors to agree before filing, and that is a big if.

Another quick case: Chisholm Oil and Gas was able to successfully complete its reorganization in just four months after filing, having filed during the pandemic with holders of 99.6% of its bank debt signed on to a restructuring support agreement. Several creditors challenged the plan at first, but this was quickly resolved in the months following the filing. Evercore (debtor’s banker) got about $4m, including a $3.25m completion fee. The fees were reduced from what was stated in the original engagement letter after the debtor filed Chapter 11. Banking fees amounted to about 0.8% of the pre-reorg debt, which is generally in line with fees paid in other similar cases.

The Year Leading up to the Filing

The bill also doesn’t start on the day you file. Companies seldom file without a lot of work beforehand, and all that prep will cost money. McDermott International hired Evercore in May of 2017 and filed a pre-pack in January 2020. The debtor paid Evercore $59.9 million in the year leading up to the filing. The company paid Evercore $43.1m of the total during the three months prior to filing, working on prepetition financing and preparing for a sale. The in-court fees were $51.7 million. A fee cap brought that down to $27.5 million. So you have to budget not just for the fees in bankruptcy, but also for all the work leading up to it.

If you’re restructuring out of court, the fee is whatever you’re willing to pay, and if you don’t like the terms offered by one advisor, you can go to another. If you’re doing it in court, you might arguably be less motivated to assess the fee, but creditors can and do object and the judge has to weigh in as well, so there’s some reasonable balance to the process. You may have several hearings, and the fees may get reduced. In the case of Frontier, after several hearings the judge instructed Evercore that its restructuring fee should be 14 basis points of the debt restructured, not 16. That number was a guesstimate based on precedent and what the judge thought at that time. Precedent generally wins, so the parties usually end up paying something in the same ballpark of fees as a percent of prepetition debt. For complex cases the fee is capped to avoid scaring the creditors and the court about how big the fees could be.

The good news is that there are lower legal fees as a percentage of prepetition debt when there’s a restructuring support agreement because the cases are quicker and there’s less bickering in court. The bottom line is that the process isn’t cheap, but costs can be significantly lowered if creditors are willing to be more agreeable in advance of filing.