What Is a Single Asset Real Estate Debtor and Why Does It Matter?

Any smaller business in South Florida that is currently considering a Subchapter V bankruptcy filing has likely come across information about the “single asset real estate debtor,” and how this type of debtor is ineligible for Subchapter V. If your business has any type of real estate dealings, you may be confused about what type of business is defined as a single asset real estate debtor, and whether your business falls into this category. It is essential to determine whether or not your business is classified as a single asset real estate debtor because it can affect your eligibility for Subchapter V bankruptcy.
Our West Palm Beach bankruptcy attorneys can tell you more about the US Bankruptcy Code’s definition of a single asset real estate debtor, but we want to emphasize that, even if your business does fall into this category, there are still other types of reorganization bankruptcy that can benefit your business. Our firm can help with Subchapter V filings, traditional Chapter 11 cases, and other types of reorganization bankruptcies for businesses in Florida.
Defining the Single Asset Real Estate Debtor
What is a single asset real estate debtor? In large part, this type of debtor is what the title sounds like. Here is the definition that comes from the US Bankruptcy Code:
“The term single asset real estate is defined as a single property or project, other than residential real property with fewer than four residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental.”
Why does it matter if your business meets this definition or not? To be eligible for Subchapter V bankruptcy, which is a more streamlined type of bankruptcy under Chapter 11, your business cannot be a single asset real estate debtor.
Bankruptcy Options for a Single Asset Real Estate Debtor
What bankruptcy options are available to a business that is likely to be classified as a single asset real estate debtor but meets the other requirements for Subchapter V bankruptcy? First, if your business might fall into the category of family farmer or fisherman, then the US Bankruptcy Code already says that your business does not technically fall within the definition of the single asset real estate debtor. Yet as a family farmer or fisherman, you will likely want to consider a Chapter 12 bankruptcy filing, which is a specialized type of bankruptcy for these kinds of businesses.
Even though Subchapter V is not a possibility for a single asset real estate debtor, this type of debtor can still consider a traditional Chapter 11 bankruptcy case, and one of our South Florida business bankruptcy attorneys can assist you with your filing.
Contact Our West Palm Beach Bankruptcy Lawyers Today
Is your South Florida business currently struggling with debt but hoping to enter into a type of reorganization bankruptcy in order to keep the business running while restructuring debt? If so, it will be essential to discuss the details of your business and its debt with a lawyer who can help you to determine your eligibility for a Subchapter V bankruptcy filing. Even if your business is ineligible for a Subchapter V case, you will likely be eligible for a traditional Chapter 11 case, or potentially another type of reorganization bankruptcy. An experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller can discuss your options with you today, and we can assist you throughout your bankruptcy case. Contact us today for more information about the services we provide to business debtors in South Florida.
Sources:
justia.com/bankruptcy/docs/basics/chapter-11/single-asset-real-estate-debtor/
justice.gov/ust/subchapter-v