Subchapter V marries the flexibility and power of Chapter 11 with the cost control of Chapter 13 for those whose debts are primarily from business transactions. It became effective in February 2020, and the debt limits were recently raised to $7,500,000. If you have business debt in this range, even if you are not currently in business, Subchapter V relief may be available to you.
Subchapter V allows you to file a Chapter 11 Plan, but the disclosure of relevant facts is contained in the plan, not a separate disclosure statement that invariably draws objections. The process is streamlined, simplified and more cost effective. It eliminates the absolute priority rule which means the debtor does not have to supply new value in order to keep his or her property in the end. It can eliminate or reduce trustee fees, and your attorney's fees.
Most importantly, you remain in control of your business and your assets subject to the rules of bankruptcy. You have a better path to the future for you and your business. Call The Law Office of Richard T. Baum today for more information about Subchapter V bankruptcy relief. We proudly serve Los Angeles, CA!
Subchapter V bankruptcy combines the flexibility of Chapter 11 with the cost efficiency of Chapter 13, offering small businesses an effective way to reorganize and reduce their debts. Designed for those with primarily business-related debts, this streamlined process allows debtors to maintain control of their assets while restructuring their finances. The Law Office of Richard T. Baum proudly serves Los Angeles and Orange County, guiding clients through Subchapter V with expertise and dedication.
Subchapter V was introduced to help small businesses efficiently restructure their debts. It provides a simplified Chapter 11 process without the burdensome disclosure requirements and allows businesses to avoid the absolute priority rule. This means you can retain your property and assets while reorganizing debts under a streamlined plan. With debt limits recently increased to $7.5 million, Subchapter V provides a more accessible path to financial recovery for small businesses.
Navigating Subchapter V bankruptcy can raise many questions. Here are common questions and answers to help you better understand how Subchapter V works and if it’s the right choice for your business.
Subchapter V offers a more streamlined process with fewer costs and simpler procedures.
Businesses or individuals with primarily business debts under $7.5 million are eligible.
The absolute priority rule requires new value for debtors to retain assets. Subchapter V eliminates this rule.
No, even if you’ve closed your business, you can still file for Subchapter V if the majority of your debt is business-related.
The process is generally shorter and more efficient than standard Chapter 11, often taking less than a year.