Chapter 11 allows companies to continue to operate while a bankruptcy court supervises the "reorganization" of the company's contractual and debt obligations.
Cameron said Chapter 11 would give "breathing space" to restructure, protecting companies from creditors and curbing job losses.
US automotive component manufacturer Delphi has been in Chapter 11 bankruptcy for two years while it tries to recover the company.
Cameron told the Confederation of British Industry (CBI): "The credit crunch has meant more companies are finding it hard to get the money they need to keep their business alive. That means one thing: more companies going into liquidation.
"And we all know what liquidation means - job losses. This isn't right for the companies which are fundamentally sound, nor for the banks who lend these companies money, nor for its employees who are being laid off."