Rise in Subchapter V Filings for Small Businesses
For small businesses in South Florida that are behind on payments to creditors and struggling to remain afloat, a reorganization bankruptcy can allow your business to restructure debt, remain open, continue operating, and, ideally, emerge from the reorganization bankruptcy on stronger financial footing. A reorganization bankruptcy can give a small business an opportunity to reconsider direct costs and overhead, catch up on debt with creditors, and implement ways of making the company more financially efficient. For many smaller businesses in South Florida, this process is possible through a Subchapter V bankruptcy filing.
According to a recent report from Yahoo! Finance, more and more small businesses are filing for Subchapter V bankruptcy. Should your business also be considering a Subchapter V filing? Consider the following information from our West Palm Beach bankruptcy attorneys.
More Subchapter V Filings Among Smaller Businesses Across the Country
During the first quarter of 2026, the total number of business bankruptcies rose by about 14 percent, with a rise in traditional Chapter 11 filings by about 37 percent from the previous year. Those numbers themselves are notable, but the highest rate of commercial bankruptcy filings occurred among Subchapter V filers. Indeed, according to the report, Subchapter V bankruptcy filings rose by approximately 67 percent in early 2026 compared to the number of filings the previous year.
Subchapter V is a subchapter of Chapter 11, and it was designed to create a more streamlined reorganization bankruptcy options for smaller businesses that meet the additional debt and other requirements.
More Small Businesses Could Become Eligible for Subchapter V
Currently, in order to be eligible for Subchapter V bankruptcy, a debtor must have a total debt amount that does not exceed the debt ceiling (currently $3,024,725 for secured and unsecured debts in total), 50 percent or more of all debt must come from business activity, and the debtor must not be a single-asset real estate debtor.
While the recent rise in Subchapter V filings is particularly notable, it is possible that filing rates could rise at an even higher rate if Congressional efforts to raise the debt ceiling are successful. According to the report, introduced legislation seeks to raise the debt eligibility limit to $7.5 million — the debt threshold that existed temporarily during the COVID-19 pandemic. If the legislation is successful, the debt threshold would be raised to this amount on a permanent basis for Subchapter V filers.
Contact a West Palm Beach Bankruptcy Attorney for Assistance with Your Subchapter V Bankruptcy in South Florida
If your South Florida small business is struggling with debt and considering the possibility of a reorganization bankruptcy, you should discuss the benefits and limitations of a Subchapter V filing — in comparison with other reorganization bankruptcy options — with an attorney who can assist you. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC can talk with you today about your business’s financial circumstances and your company’s eligibility for different forms of reorganization bankruptcy in Florida. While a traditional Chapter 11 bankruptcy filing and Subchapter V filings are the most common for smaller businesses in the West Palm Beach area, your business could be eligible for a Chapter 12 filing as well, or, in some cases, a Chapter 13 filing depending on the structure of the business. Contact our firm today to find out about your reorganization bankruptcy options and to begin working on your bankruptcy case.
Source:
finance.yahoo.com/economy/policy/articles/first-quarter-subchapter-v
