As a small business owner, you likely heavily depend on the success of your business. So one of the most difficult scenarios you can find yourself in is falling behind on certain types of debt. If you find yourself at this point, then filing for Subchapter 5 bankruptcy may be your best bet. Continue reading to learn if you are eligible to file and how an experienced Rockland County business bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can support you throughout this difficult time.
What is Subchapter 5 bankruptcy?
In past years, if small business owners had debts that they were unable to pay off, they usually opted to file for Chapter 11 bankruptcy. However, back in 2019, the United States Congress legislated the Small Business Reorganization Act. Essentially, this act added Subchapter 5 bankruptcy to Chapter 11 bankruptcy. Of note, many small business owners find Subchapter 5 bankruptcy to be a far more viable option than the standard Chapter 11 bankruptcy.
Am I eligible to file for Subchapter 5 bankruptcy for my New York business?
To be eligible to file for Subchapter 5 bankruptcy, your New York small business must be less than $7.5 million in debt. Of this, at least half of your pre-petition debts must be from commercial business activities.
To file, you must elect Subchapter 5 on the Chapter 11 petition. With the assistance of an attorney, you will then file varying documents with the court and produce a reorganization plan. Your filing will be successful so long as the Subchapter 5 U.S. trustee appointed to your case approves of your reorganization plan.
How is filing for Subchapter 5 bankruptcy better than Chapter 11 bankruptcy for my New York business?
As described above, New York small business owners find some advantages of Subchapter 5 bankruptcy over Chapter 11 bankruptcy. Examples of benefits read as follows:
- There is no unsecured creditor committee with Subchapter 5.
- There is no absolute priority rule with Subchapter 5, so you can make a reorganization plan without unanimous agreement by creditors.
- There are no quarterly trustee fees with Subchapter 5.
If you feel as if filing for Subchapter 5 bankruptcy is the best move for you, then you should not hesitate in contacting a skilled Rockland County bankruptcy attorney. Our team is ready to support your small business in any way we can. We are dedicated to fighting to give your small business a fair chance in New York State. Give us a call or contact us online today.
Contact our experienced New York firm
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.