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The filing will help progress a restructuring plan the company agreed with Bain Capital Partners. Bain Capital has promised USI an equity investment that depends on the company erasing some $120m (£83m) in debt from its balance sheet.
A spokesman for the company says it is entering the Chapter 11 process with a majority of leaseholders and two-thirds of its bondholders on board.
USi also announced the signing of an investment agreement with Bain Capital worth up to $106m, subject to court approval. Under the terms of the agreement, once USi emerges from Chapter 11, USi Holdings - a Bain affiliate - will initially invest $81m in the company, with an additional $25m to be invested once certain business milestones are met.
"This is a pretty good thing for USi," said Amy Mizoras, an analyst at market research firm IDC. "The combination of the Bain investment and restructuring of the balance sheet will be a positive thing for the company going forward."
Not all analysts put a positive spin on the development, however.
Ben Pring, chief analyst for Gartner, said the company's predicament has sent a "bad signal" to a marketplace already riddled with ASP failures and waning confidence.
"You essentially say to initial vendors and investors the investment is gone," said Pring. Commenting on the Chapter 11 filing, he said: "It's not something you do except as a last resort."
Pring said that USi fell victim to the same situation that affected Exodus Communications before Cable and Wireless PLC rescued the hosting giant from its own debt mountain.
"[USi] spent a billion dollars on building entire application and infrastructure - on the idea that demand would flood through the door," said Pring. "That hasn't happened the way they hoped."
Bain, a global investment firm with more than $12bn in assets, will ultimately own all of the equity in USi.
Stern said service to USi customers would continue uninterrupted throughout the Chapter 11 period. "USi will emerge from the reorganisation plan a much stronger company," Stern said.