Bankruptcy to make profit? Redback files for bankruptcy.

“Network gear maker Redback Networks filed on Monday a Chapter 11 bankruptcy plan that would erase $467 million in debt. … Chief Executive Kevin DeNuccio said Redback could report its first-ever profitable quarter next year, if the plan is approved.”

Ok, call me naive but I don’t get it. How does a company file for bankruptcy, and yet still continue trading and expect to make a profit next year? That seems rather backward to me. The article states that “the plan has already been approved by Redback’s creditors”.