Who Can File For Subchapter V Bankruptcy?
Are you considering bankruptcy for your business? If so, you may have heard about Subchapter V bankruptcy, and you might be wondering if you are eligible to file for this relatively new type of bankruptcy. You should know that Subchapter V falls under Chapter 11 bankruptcy in the U.S. Bankruptcy Code, and this type of bankruptcy is specifically designed for small business debtors that have a limited amount of debt. In order to determine whether or not your business qualifies for Subchapter V bankruptcy, you should speak with one of our West Palm Beach bankruptcy attorneys about your particular circumstances. We can assess the details of your business and your business debts to advise you on your eligibility for Subchapter V. In the meantime, the following information should help to clarify what types of parties are eligible to file for Subchapter V bankruptcy in South Florida.
Subchapter V is for Businesses and Not Typically for Individuals
First, it is important to understand that Subchapter V bankruptcy is designed for businesses and not for individuals. Specifically, as the U.S. Courts explain, in order to file for bankruptcy under Subchapter V, “the debtor must be engaged in commercial or business activities (other than primarily owning or operating a single piece of real property).” To be clear, this is a type of reorganization bankruptcy for businesses and not for individuals with debt that is made up entirely of consumer debt.
Subchapter V is for Smaller Businesses
Subchapter V is not for just any business, but rather is designed specifically with smaller businesses in mind. The U.S. Courts discuss Subchapter V cases in connection with “small business cases.” Accordingly, a large corporation is unlikely to be eligible for a Subchapter V bankruptcy or a small business bankruptcy.
You should know that the U.S. Courts distinguish between “small business cases” and Subchapter V cases, clarifying that specific “small business cases” have requirements similar to but distinct from Subchapter V alone.
Subchapter V is for Smaller Businesses with Limited Amounts of Debt
How is a determination made about what types of businesses are eligible for Subchapter V cases? One of the key requirements is that the business debtor owes a combined amount of secured and unsecured debt of less than $7,500,000, and “not less than 50 percent of which arose from the commercial or business activities of the debtor.”
Contact a West Palm Beach Bankruptcy Lawyer
Businesses that are considering a reorganization bankruptcy should certainly be thinking about Subchapter V if they are eligible for this specific type of Chapter 11 bankruptcy. Unlike a traditional Chapter 11 bankruptcy, Subchapter V cases are streamlined and cost small businesses less money than a traditional case. They are also less complex and allow for more small business debtors to restructure debts in order to get their business back on track. If you have questions about any aspect of bankruptcy law, or if you need help determining your eligibility for bankruptcy or filing a petition, you should get in touch with an experienced West Palm Beach bankruptcy attorney at Kelley Kaplan & Eller for help. Our firm has years of experience serving clients in South Florida, and we can begin working with you today on your bankruptcy case.