Switch to ADA Accessible Theme
Close Menu
West Palm Beach Bankruptcy & Business Attorneys > > Bankruptcy Attorneys > What Your Business Should Know About Subchapter V Bankruptcy

What Your Business Should Know About Subchapter V Bankruptcy


If you own a small business and you are considering bankruptcy in order to reorganize debts and keep your business open, you will likely want to consider Subchapter V. The Small Business Reorganization Act of 2019 (SBRA) created Subchapter V, which is a type of Chapter 11 bankruptcy designed specifically for small businesses. It is designed to be streamlined and to make it easier for small businesses to obtain the benefits of reorganization bankruptcy without the high costs and complications of a traditional Chapter 11 bankruptcy filing. Our West Palm Beach bankruptcy lawyers want to provide you with more details concerning Subchapter V and how it could work for your business.

Type of Chapter 11 Bankruptcy 

The SBRA specifically allowed for the creation of Subchapter V bankruptcy under Chapter 11. Thus, a Subchapter V bankruptcy case is also a type of reorganization bankruptcy that allows small businesses to remain open while going through bankruptcy and reorganizing debts. While Subchapter V falls under Chapter 11, it is important to know that there are many distinctions between Subchapter V and a traditional Chapter 11 bankruptcy case, and those distinctions benefit small businesses.

Intended for Small Businesses 

As we noted above, Subchapter V is intended for small businesses. There is a debt ceiling on Subchapter V, which was initially set at just over $2.7 million (meaning that your business must have less than that amount of debt to qualify). However, a new law created a debt ceiling of $7.5 million until at least June 21, 2024. As such, if your business wants to seek bankruptcy protection before June 21, 2024, you may be eligible for a Subchapter V bankruptcy filing if your business has a total debt under that number.

Makes it Easier for Small Businesses to Reorganize Debts 

The major benefit of Subchapter V is that it streamlines the Chapter 11 bankruptcy process and, in effect, makes it easier for small businesses to be able to file for and complete a reorganization bankruptcy. What does that actually mean? First, the costs to file for Subchapter V are lower. In addition, the business does not have to file a Disclosure Statement, which limits the involvement of creditors, thereby reducing costs and speeding up the approval process of the reorganization plan. Subchapter V also eliminates the “absolute priority rule,” and debtors may be able to have reorganization plans approved even if there is a nonconsenting creditor.

Contact Our West Palm Beach Bankruptcy Lawyers Today 

Do you have questions about Subchapter V and your business’s bankruptcy options? While Subchapter V is not available to all businesses that are considering bankruptcy, it is a possibility for a wide range of small businesses in Florida. Given that Subchapter V makes it much easier for small bankruptcies to reorganize their debts, you should discuss whether this type of bankruptcy is right for your business with a lawyer who can help. Get in touch with an experienced West Palm Beach bankruptcy attorney at Kelley Kaplan & Eller today to learn more about how our firm assists small businesses with traditional Chapter 11 and Subchapter V bankruptcy cases in Florida.



Facebook Twitter LinkedIn

© 2019 - 2024 Kelley Kaplan & Eller All rights reserved.
This law firm website and legal marketing are managed by MileMark Media.

21st Anniversary