In February of 2019, Congress enacted the Small Business Reorganization Act. This Act added Subchapter 5 to Chapter 11 of the United States Bankruptcy Code, which essentially provided small businesses with a new form of bankruptcy that allows business owners to reorganize their debt in a streamlined, cost-effective way. If your business is currently in a significant amount of debt and you were considering filing Chapter 11 bankruptcy, you should continue reading and speak with our Rockland County bankruptcy attorney to learn more about Subchapter 5 bankruptcy in New York State and whether it may be the best option for you. Here are some of the questions you may have:
Do I qualify for Subchapter 5 bankruptcy in New York?
If your small business has incurred up to $7.5 million in debt, you should qualify for Subchapter 5 bankruptcy. That being said, you will have to prove that at least half of your pre-petition debts came from commercial business activities. If you are a single asset real estate business, you will, unfortunately, not qualify.
How do I file for Subchapter 5 bankruptcy?
When you and your attorney file a Chapter 11 petition, you will simply elect Subchapter 5. From there, you will file various documentation with the court (our firm can work to ensure you file all of the necessary documentation), establish and file a reorganization plan within 90 days from the date of filing, and from there, as long as the Subchapter 5 U.S. trustee appointed to your case agrees that the reorganization plan is viable, you should be sucessful in filing Subchapter 5 bankruptcy.
Why should I choose Subchapter 5 over standard Chapter 11?
While Chapter 11 bankruptcy may work well for many business owners in New York, Subchapter 5 comes with its own unique set of benefits, including no unsecured creditor committee, no quarterly U.S. trustee fees, and no absolute priority rule, meaning you may still reorganize your business plan without unanimous agreement by creditors are long as you meet other criteria. If you have any other questions or are ready to get started, give our seasoned Rockland County bankruptcy attorney a call today. Our firm is ready to guide you through every step of the process in an effort to ensure that your business can become profitable once 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.
