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What Is a Chapter 11 Subchapter V Bankruptcy?

Serving Families Throughout Mobile

Chapter 11 Subchapter V is a relatively new type of bankruptcy created by the Small Business Reorganization Act of 2019 (SBRA). It is designed to make the Chapter 11 bankruptcy process more accessible and affordable for small businesses with debts of $7.5 million or less.

Filing a Reorganization Plan

Under Chapter 11 Subchapter V, a small business debtor can file for bankruptcy and propose a plan to reorganize its debts and operations. The debtor must file a reorganization plan within 90 days of filing for bankruptcy, and it must be approved by the court and the debtor’s creditors.

Features of Chapter 11 Subchapter V

One of the key features of Chapter 11 Subchapter V is that it provides more flexibility for small businesses to restructure their debts and operations.

For example, the plan can do the following:

  • Modify secured and unsecured debts,
  • Reduce the interest rate on debts, and
  • Extend the repayment period for debts.

Additionally, the plan can modify leases and contracts and be confirmed without needing a creditor committee.

Another important feature of Chapter 11 Subchapter V is that it requires the appointment of a trustee to oversee the bankruptcy process and assist the debtor in developing a reorganization plan.

The trustee is also responsible for ensuring that the debtor makes timely payments under the plan and that the plan is carried out according to applicable laws and regulations.

Get Legal Help with Your Case

Overall, Chapter 11 Subchapter V is intended to be a more streamlined and cost-effective option for small businesses seeking to restructure their debts and operations through the bankruptcy process.

If you are a small business owner in Mobile considering filing for bankruptcy, contactRyan Legal Services, Inc. at (251) 241-5234 to discuss your options.