Congress enacted the Small Business Reorganization Act which added Subchapter 5 to Chapter 11 of the United States Bankruptcy Code. This essentially provided small businesses with a new form of bankruptcy that allows business owners to reorganize their debt in a cost-effective, streamlined way.
If your business is facing a significant amount of debt and you were considering filing Chapter 11 bankruptcy, read on to learn more about Subchapter 5 bankruptcy. To discover if this is the best option for you, give our Chapter 11 bankruptcy attorney a call today.
Do I qualify for Subchapter 5 bankruptcy?
You should qualify for Subchapter 5 bankruptcy if your small business has incurred up to $7.5 million in debt. You will have to prove that at least half of your pre-petition debts came from commercial business activities. Unfortunately, you will not qualify if you are a single-asset real estate business.
How can I file for Subchapter 5 bankruptcy?
With the assistance of your attorney, when you file a Chapter 11 petition, you will simply elect Subchapter 5. Next, you will file various documentation with the court within 90 days from the date of filing. This is why it is necessary to have an attorney in your corner during this process. Our firm can work to ensure that you file all of the necessary documentation. You will also establish and file a reorganization plan within 90 days from the date of filing. From there, if the Subchapter 5 United States trustee appointed to your case agrees that the reorganization plan is viable, you should be successful in filing Subchapter 5 bankruptcy.
What are the benefits of filing Subchapter 5 over standard Chapter 11?
Chapter 11 bankruptcy may work well for many business owners in New York. However, Subchapter 5 comes with its own set of unique benefits such as the following:
- No quarterly U.S. trustee fees
- No unsecured creditor committee
- No absolute priority rule
- This means that you are still able to reorganize your business plan without unanimous agreement by creditors as long as you meet other criteria
If you have any further questions about filing Subchapter 5, do not hesitate to contact our business bankruptcy attorney. If you are prepared to get started, give our firm a call today to learn more about how we can assist you with our services. Our firm will guide you through each step of the process ahead. We want each of our client’s businesses to become profitable again.
Contact our experienced New York firm
Bankruptcy, for many people, is a frightening endeavor. Fortunately, with the help of an experienced attorney, it does not have to be. 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. We will have your back every step of the way.
