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This article investigates the operation of cascaded H-bridge (CHB) based static synchronous compensator (STATCOM) after failure in its submodules (SMs). Once a switch fails, the corresponding faulty SM is bypassed. In the post-fault operation, a zero-sequence voltage (ZSV) is injected to the converter phases to generate the maximum possible line-to-line voltage. Using a clamping technique, the fundamental component of injected ZSV (FZSV) is minimized according to the operating point of CHB STATCOM. But, FZSV leads to unequal flow of active power into the converter phases. In the proposed method, negative-sequence current is controlled to manage the active power flow within CHB phases. By doing this, the effect of FZSV on active power of CHB phases is compensated and the voltages of capacitors are kept balanced. This method ensures the continuous operation of CHB STATCOM with the minimum over-design and guarantees the voltage balance of capacitors after a failure. The presented simulation and experimental results validate the feasibility and effectiveness of the proposed method. [ABSTRACT FROM AUTHOR]