Subchapter V Bankruptcy Simplified for Small Business Owners

If you’re a small business owner struggling to keep your business afloat, you might feel like you’re out of options. The good news is that Subchapter V bankruptcy could provide the lifeline you need. It’s a unique and efficient type of bankruptcy tailored for small businesses. Here’s what you need to know.

What is Subchapter V Bankruptcy?

Subchapter V is part of Chapter 11 bankruptcy, but it’s specifically designed for small businesses with debts below $7.5 million.  This process helps businesses reorganize their finances, stay in control of operations, and pay off creditors while keeping the doors open.

Why Subchapter V?

1. Keep Your Business Running: Unlike Chapter 7, where assets are sold off, Subchapter V allows you to keep operating your business while you work on a repayment plan.
2. Less Complicated: It skips some of the hurdles of traditional Chapter 11, like the need for a creditors’ committee or a disclosure statement.
3. Cost-Effective: Subchapter V is faster and involves fewer administrative costs.
4. Debt Forgiveness: Once you successfully complete the plan, you may get a discharge of the remaining eligible debts.

How It Works

1. Filing for Bankruptcy: You file under Subchapter V of Chapter 11. Once filed, a trustee is assigned to your case.
2. Stay in Control: Unlike other bankruptcies, you remain in charge of your business operations (unless there’s cause to remove you).
3. Plan Development: You work with the trustee and creditors to create a repayment plan that fits your financial reality.
4. Approval: Your plan is reviewed and confirmed by the court, even if some creditors disagree, as long as it meets specific requirements.

Who Can File?

To qualify, your business must:

• Be involved in commercial or business activities.
• Have total debts of no more than $7.5 million, with at least half related to business operations.

A Fresh Start for Your Business

Subchapter V gives struggling small business owners a path to restructure, regain financial stability, and thrive again. At Sigal Law Firm, we specialize in helping small business owners navigate this process smoothly.

If you’re feeling overwhelmed by debt, don’t wait. Contact us today for a consultation to explore if Subchapter V bankruptcy is the right fit for you.

For personalized assistance, reach out to Attorney Garik Osipyants at Sigal Law Firm. Let us help you turn the page to a brighter financial future.