Small Business Bankruptcy Lawyer in Aurora
Working Subchapter V of Chapter 11 to Your Advantage
In February of 2020, the Small Business Reorganization Act (SBRA) added
Subchapter V to
Chapter 11 bankruptcy. Congress passed this act to address the difficulties small businesses
have had when attempting to file Chapter 11. Under Subchapter V, small
businesses have access to a streamlined procedure that is more efficient
and less expensive than traditional Chapter 11. As a result, countless
small companies can now successfully restructure and keep from going out
If your small business is no longer profitable because of overwhelming
debt, we urge you to call
Consumer Law Pro. Our firm has provided skilled bankruptcy support to small businesses
like yours for more than a decade. We can help you by closely analyzing
your financial situation and determining whether Chapter 11 bankruptcy
is right for you.
With qualified support, you may be able to use Subchapter V to save your
small business from liquidation. Call Consumer Law Pro at
(303) 622-3833 or
contact us online to learn more.
What Is Subchapter V?
Chapter 11 bankruptcies have long been associated with multi-million-dollar
corporations, allowing them to reorganize their debt while remaining in
operation. This type of bankruptcy was not necessarily designed with small
business owners in mind.
The SBRA is an attempt to remedy this inequity and make the process more
accessible to small business owners. Subchapter V is only available to
businesses with less than $2,725,625* of secured and unsecured debt.
*COVID-19 NOTICE: Per the CARES Act, the debt threshold is $7,500,000 until
March of 2021.
The following are a few major highlights of Subchapter V.
Appointment of a Trustee
While the small business owner continues their business operations, the
bankruptcy court appoints a trustee. The trustee’s role is not to
run the daily operations or liquidate assets but to help the company develop
a feasible reorganization plan, participate in the plan, and oversee the
reimbursement of creditors.
No Creditors’ Committees
Under Subchapter V, only the debtor can propose and submit a reorganization
plan. Disclosure statements are eliminated, and creditors’ committees
will not be required. Without competing plans from creditors, contested
hearings will not be necessary, thus reducing associated costs. You must
generally file your plan within 90 days of filing your original bankruptcy petition.