Springfield Subchapter V Attorneys

Guiding Small Business Owners to Debt Relief

Chapter 11 bankruptcy enables the financial reorganization of many businesses grappling with overwhelming debt, but the process can often be too expensive and protracted to be practical for smaller businesses struggling to stay afloat.

Subchapter V of Chapter 11 of the Bankruptcy Code was introduced in the Small Business Reorganization Act of 2019 (SBRA) and provides dramatically expanded relief opportunities for companies unable to afford a typical Chapter 11 bankruptcy.

Our Springfield Subchapter V lawyer at Licata Bankruptcy Firm can help your small business leverage these new tools and guide you through each step of the process.

We are familiar with all relevant state and federal bankruptcy laws and can help you make informed decisions at each critical stage. Through Subchapter V, we will help your small business reorganize and recover.

If your small business is struggling with debt, do not hesitate to reach out to our team. Call (417) 213-5006 or contact us online to schedule your free initial consultation.

Qualifying for Subchapter V

Filing for bankruptcy under Subchapter V is open to both individuals and business entities. At least half of the filer’s debts must stem from commercial business activity, and total debts may not exceed $2,725,625. Debtors whose only commercial operation is a single-asset real estate operation are not eligible, which can preclude some landlords.

You must specifically choose to pursue Subchapter V rules when filing for bankruptcy. You will need to include federal tax returns, balance sheets, operation statements, and other financial disclosures and documents with your bankruptcy petition. Our team of experienced bankruptcy attorneys in Springfield can help you gather and prepare this documentation.

Understanding the Subchapter V Process

Once you have filed under Subchapter V, the bankruptcy court will appoint a trustee to manage your case. The debtor will be responsible for compensating the trustee, who will oversee the reorganization and repayment plan. Unlike a Chapter 7 bankruptcy or typical Chapter 11 bankruptcy, the trustee will not assume control of company assets or have the ability to liquidate them to repay debts.

Like in a Chapter 11 bankruptcy, the debtor will need to file a consensual reorganization plan with the court within 90 days of the original petition. This plan must outline how the debtor proposes to compensate creditors.

Unlike a Chapter 11 bankruptcy, creditors cannot file their own plan. In lieu of a disclosure statement, Subchapter V filers need only documents analyzing liquidity of company assets, company operations, and future ability to make repay creditors via the proposed consensual plan.

The debtor has the ability to move forward with their plan without necessarily receiving the approval of creditors so long as the proposal is determined by the court to be nondiscriminatory and “fair and equitable.” Under the plan, creditors must receive as much as they would have if the debtor’s assets were liquidated under a Chapter 7 bankruptcy.

Subchapter V also offers the unique opportunity to spread repayment over a period of 3 to 5 years, similar to a Chapter 13 bankruptcy. If this option is pursued, all projected disposable income must go toward repaying creditors throughout the repayment period. Projected disposable income is calculated by subtracting business operations expenses and expenses supporting the debtor from gross income.

Debtors filing Subchapter V will typically receive a discharge at the conclusion of the process. If a consensual plan was proposed and carried out, the discharge is granted when the plan is confirmed. In situations where the debtor commits its projected disposable income to the repayment of creditors, the discharge is granted when all payments have been made.

Benefits of Subchapter V

Chapter 11 bankruptcy can be extremely helpful for many businesses, but the timeline and costs associated with filing can be prohibitive to smaller businesses on the brink of going under. Subchapter V introduces many distinct advantages over a traditional Chapter 11 filing for those who qualify. Our Springfield Subchapter V attorneys can evaluate your eligibility and determine if this newer alternative makes sense for you or your company.

Advantages to filing for bankruptcy under Subchapter V include:

• Lower costs. Subchapter V was designed with small businesses in mind, so there are fewer expenses associated with the process. This allows more smaller enterprises to seek relief through bankruptcy.
• More control. Chapter 11 bankruptcy typically gives creditors and other interested parties the ability to dispute the plan proposed by the debtors as well as file their own plan. Resolving these conflicts can result in exorbitant delays. Subchapter V empowers debtors to develop plans that can proceed without needing creditor approval. Filers also have the option to pursue a multiyear projected disposable income payment plan instead of a consensual plan.
• Streamlined process. Subchapter V filers do not have to provide a disclosure statement, and a creditor committee is generally not assembled. Avoiding these sources of objections allow the bankruptcy to proceed more efficiently than a typical Chapter 11 bankruptcy.

Your Partner in Bankruptcy

Our team at Licata Bankruptcy Firm PC understands that you have put blood, sweat, and tears into your small business. Our Springfield Subchapter V lawyers can help your venture make the most of the institution’s advantages and get you the debt relief that you need. Our firm practices exclusively in bankruptcy, and our team has years of hands-on experience helping companies efficiently and effectively reorganize. Subchapter V opens up bankruptcy to even more businesses at a more affordable price, giving your organization the ability to overcome seemingly insurmountable debt and emerge even stronger than ever.

Learn more about how Subchapter V can benefit your business by calling (417) 213-5006 or contacting us online.