There are few things worse as a business owner to find yourself behind on certain types of debt. In previous years, many business owners with debt they cannot pay off on their own would file for Chapter 11 bankruptcy. That said, back in 2019, Congress enacted the Small Business Reorganization Act, thereby adding Subchapter 5 to Chapter 11 bankruptcy. For many, Subchapter 5 will prove to be a far more viable option than standard Chapter 11. Please continue reading and reach out to our experienced Rockland County bankruptcy attorney to learn more about Subchapter 5 bankruptcy in New York and how our legal team can assist you through the process ahead. Here are some of the questions you may have:
How do I know if I can file for Subchapter 5 bankruptcy in New York?
To file for Subchapter 5 bankruptcy, your small business must have less than $7.5 million in debt and that at least half of your pre-petition debts are from commercial business activities. Additionally, you cannot be the owner of a single asset real estate business. To file, you and your attorney will elect Subchapter 5 on the Chapter 11 petition. We will then file various documents with the court and create a reorganization plan. As long as the Subchapter 5 U.S. trustee appointed to your case approves of the plan, you should successfully file for Subchapter 5.
What makes Subchapter 5 bankruptcy better than Chapter 11 bankruptcy?
Just some of the benefits provided by Subchapter 5 bankruptcy, as opposed to Chapter 11 bankruptcy, are as follows:
- No unsecured creditor committee
- No absolute priority rule (this means you can reorganize your business plan even without unanimous agreement by creditors)
- No quarterly trustee fees
If you have any additional questions about Subchapter 5 bankruptcy in New York, please don’t hesitate to give us a call or contact us online today. We believe that small business owners in New York State deserve a fair shake, and we are here to help you and your business in any way we can. With decades of experience under our belt, you can feel confident in your decision to turn to the Law Offices of Allen A. Kolber, Esq.
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.