If you own a small business that has fallen on hard times, you may want the option of staying in business while being able to pay off your debts. Debt reorganization under Chapter 11 of the Bankruptcy Code provides that option, but is normally complicated and expensive. Subchapter V, added in 2019, includes special provisions designed to make the process easier for small businesses. Gates Law Group, A Professional Corporation is ready to help small businesses like yours take advantage of these new provisions.
Subchapter V bankruptcies are available only to “small business debtors,” which are defined as persons or entities engaged in business or other commercial activities (other than operating a single piece of real estate) who owe no more than $7.5 million in unconditional debts (those not dependent on future events) to creditors not connected to the business.
A small business like yours that elects to proceed under Subchapter V may avoid some of the complex and costly aspects of Chapter 11 cases imposed on larger businesses. Notably:
On the other hand, to make up for the absence of a creditors’ committee, Subchapter V imposes more oversight on a small business debtor than in a normal Chapter 11. In addition, you must apply all of your projected disposable income to paying off your creditors for the three to five years the plan of reorganization is in effect.
Despite these added requirements, Subchapter V small business cases are substantially more likely to result in a successful reorganization. If you own a small business in need of substantial debt relief, we can explain the requirements and advantages of a Subchapter V case, file all of the necessary paperwork, seek creditor and court approval and guide you through to emergence from the process on a firmer footing.
Gates Law Group, A Professional Corporation represents local businesses in bankruptcies brought under Subchapter V of the bankruptcy code. Please call 559-432-9944 or contact us online to schedule a free initial consultation. We serve clients from our main office in Fresno and locations in Paso Robles and Visalia.