The Small Business Reorganization Act, which went into effect on February 19, 2020, added the option for small businesses to file bankruptcy under newly enacted Subchapter V of Chapter 11 of the Bankruptcy Code. The Law Office of Charles A. Higgs filed the first Subchapter V Chapter 11 Bankruptcy case in the Southern District of New York and one of the first Subchapter V Bankruptcy cases in the Country.
What are the benefits of a Subchapter V Bankruptcy?
Permits owners of the business to retain their ownership interest without paying creditors in full.
The Debtor can confirm a Subchapter V Bankruptcy Plan without the consent of any creditors.
Extends the time during which administrative claims can be paid.
Subchapter V Trustee is appointed in each case. The Subchapter V Trustee can be helpful in assisting the Debtor in reaching agreements with creditors and putting together a consensual Subchapter V bankruptcy plan.
Designed to be an expedited and cost-efficient process compared to traditional Chapter 11 bankruptcy cases.
No quarterly US Trustee Fees.
Who can file a Subchapter V Bankruptcy Case?
In order to be eligible to file a Subchapter V Bankruptcy Case you must be engaged in commercial or business activities (excluding a single asset real estate Debtor).
Must have aggregate noncontingent liquidated secured and unsecured debts as of the date of the filing of the petition or the date of the order for relief in an amount not more than $7,500,000.
If my business files for Subchapter V Bankruptcy can I continue to operate the business?
Yes, a business that files for bankruptcy under Subchapter V of the Bankruptcy Code can continue to operate during the bankruptcy case.
What happens after the filing of a Subchapter V Bankruptcy Case?
Upon the filing of a Subchapter V Bankruptcy case, lawsuits and other collection actions against the business are immediately stayed.
A proof of claim bar date will be set by the Court, the proof of claim bar date is the date by which all parties having claims against the Debtor must filed their claim with the bankruptcy court.
A status conference will be scheduled with the Court within 45 days of the filing of the Subchapter V Bankruptcy Petition.
The business will put together a proposed Subchapter V plan of reorganization, through which the business can restructure its debts and obligations.
If you have a small business that is struggling with debts, lawsuits, or other obligations give The Law Office of Charles A. Higgs a call to see if Subchapter V bankruptcy is right for your business.
The Law Office of Charles A. Higgs represents small businesses throughout Westchester County, Bronx County, New York County, Kings County, Queens County, Putnam County, Rockland County, Dutchess County, and the surrounding areas in Chapter 11 and Subchapter V bankruptcy cases.
The Law Office of Charles A. Higgs has represented small businesses the following sectors in Chapter 11 and Subchapter V Bankruptcy:
Food and Beverage