It seems like Chapter 11 implies just the opposite when you say "Clearly bankruptcy filing is evidence of the worthless status of assets.” Companies file for Chapter 11 to preserve and protect assets. It is evidence of underlying value. According to what I read, Chapter 11 is essentially a debt management tool:

Companies choose to file Chapter 11 because its long-term revenues will be higher than the liquidation value of the assets. This way, creditors can get more money back if they allow the debtor business to reorganize and work out a payment plan.

A business going through Chapter 11 often downsizes as part of the process, but the objective is reorganization, not liquidation. The biggest advantage is that a business can continue operations while going through the reorganization process. This allows them to generate cash flow that can aid in the repayment process. The court also issues an order that keeps creditors at bay. Some Chapter 11 cases wrap up within a few months, but it's more usual for it to take six months to two years for a Chapter 11 case to come to a close.