Chapter 11 Bankruptcy
Chapter 11 bankruptcy provides business owners with an efficient and cost-effective way to reorganize their business debts while continuing operations. Subchapter V, Chapter 11 was created specifically for small businesses and offers a faster, less expensive alternative to traditional Chapter 11 bankruptcy.
How Subchapter V Works
After filing, a Subchapter V trustee is appointed to facilitate the case and help develop your reorganization plan. You'll continue operating your business under court oversight while proposing a plan to restructure debt. The plan typically provides for payments over three to five years based on your business's projected disposable income.
Unlike traditional Chapter 11, you don't need creditor approval to confirm your plan—the court can confirm it over creditor objections if the plan is fair and feasible. This gives viable businesses a real chance to reorganize successfully.
What Can a Subchapter V Plan Accomplish?
Reduce or restructure secured debt on equipment, vehicles, or real estate
Extend payment terms to make debt manageable
Eliminate or reduce unsecured debt
Cure defaults on contracts and leases
Provide time to stabilize operations and return to profitability
Is Your Business a Good Candidate?
Subchapter V works best for businesses that have a viable operation but are burdened by too much debt or facing a temporary crisis. If your business has value worth preserving, regular income or revenue, and a realistic path to profitability, Subchapter V may offer the breathing room you need to succeed.