Mobile Subchapter V Attorney
Helping Small Business Owners Take Control of Their Debts
Chapter 11 of the Bankruptcy Code provides a path for businesses to restructure their debts and assets to allow them to continue operations. While Chapter 11 is an important tool for businesses in financial distress, it can also be a lengthy and costly process for small businesses. Fortunately, a special category of Chapter 11 called Subchapter V can provide a more streamlined and cost-effective approach for certain small business debtors. Subchapter V was created by the Small Business Reorganization Act of 2019 and allows eligible debtors to submit a reorganization plan within 90 days of filing for bankruptcy. This can help small businesses emerge from bankruptcy more quickly and with greater control over the process.
If you are a small business owner in Mobile, Alabama, struggling with debt, Ryan Legal Services, Inc can help you file for bankruptcy under Subchapter V. Back by over 24 years of experience, we have helped numerous clients successfully navigate the bankruptcy process and seek a fresh start. We understand that filing for bankruptcy can be a stressful and overwhelming experience. That is why we offer our clients personalized legal guidance and support. Our attorney is well-versed in the nuances of bankruptcy law and can help you understand the eligibility requirements for Subchapter V and the process and benefits associated with filing under this category.
To schedule a consultation with our Mobile Subchapter V attorney, please contact us at (251) 241-5234.
An Overview of Subchapter V
Subchapter V is a special category of Chapter 11 bankruptcy designed to help small business debtors restructure their debts and assets in a more expedited and less expensive way.
Subchapter V can allow for the following:
- Modifications of secured and unsecured debts
- Reductions in interest rates
- Extensions of repayment periods
The goal is to help small businesses avoid liquidation and continue to provide jobs and economic benefits to their communities.
To be eligible for Subchapter V, a debtor must be a small business with debts of no more than $7.5 million. This debt limit was increased from $2.7 million under the CARES Act in response to the economic impact of the COVID-19 pandemic and extended under the Bankruptcy Threshold Adjustment and Technical Corrections Act. In addition, the debtor must derive at least 50% of its debts from commercial or business activities, and the reorganization plan must be proposed in good faith.
The Process of Subchapter V
The process of Subchapter V bankruptcy begins with the debtor filing a petition for bankruptcy with the bankruptcy court. The debtor is responsible for submitting financial statements, including balance sheets, cash-flow statements, and Federal income tax returns. Additionally, the debtor must update the court on profitability, projected cash receipts and disbursements, and compliance with the bankruptcy code.
One key difference between Subchapter V and traditional Chapter 11 bankruptcy is the role of the trustee. In Subchapter V, the trustee’s role is more limited than in Chapter 11 cases. The trustee does not take over the management of the business but rather oversees the reorganization of the debtor’s assets and debts. They may also review the debtor’s conduct and appear at court hearings.
Unlike traditional Chapter 11 bankruptcy, the debtor generally does not need approval from creditors on their proposed plan under Subchapter V. However, the debtor’s plan must be fair and equitable, meet certain requirements, and be approved by the court. The court must find that the plan is feasible and in the best interests of the creditors.
Benefits of Subchapter V
Subchapter V of the Bankruptcy Code offers several benefits to small business debtors. One of the primary benefits is an expedited process, as the absence of a disclosure statement streamlines the bankruptcy proceedings. Additionally, a status conference is held within 60 days of filing, allowing for a faster resolution.
Another benefit is cost savings. The streamlined process can reduce legal fees and administrative expenses, making it more accessible to small business owners with limited resources. This is especially important since the cost of traditional Chapter 11 bankruptcy proceedings can be prohibitively expensive for small businesses.
Subchapter V also offers greater control for debtors. The debtor retains ownership and control of the business while developing a reorganization plan, allowing them to make decisions and take actions to ensure their business’s survival. This can be a significant advantage, as traditional Chapter 11 bankruptcy proceedings often involve the appointment of a trustee who takes control of the business operations.
Schedule a Consultation Today
Subchapter V can be an enticing option for small business owners. However, it is important to note that filers must meet eligibility criteria and might face challenges during the process. Therefore, consulting with a Mobile Subchapter V lawyer is crucial. They can guide you through each stage of your case, help you make informed decisions, and ensure that you comply with the Bankruptcy Code requirements.
Please do not hesitate to reach out to Ryan Legal Services, Inc for help with your case. Call (251) 241-5234 or submit an online contact formtoday.