Subchapter V Is a Boon to Small Businesses
You have probably heard the gloomy statistic that most businesses close within the first five years of opening. What that statistic does not take into account is that even the businesses that are still operating take a while to become profitable. Debt is a virtually inescapable part of operating a small business, even a successful one. The good news is that federal law gives businesses the right to file for bankruptcy protection, just as it affords this right to individuals. Chapter 11 bankruptcy is a category of business bankruptcy filing that enables businesses to continue to operate while restructuring their debts. In 2019, the Small Business Reorganization Act introduced amendments to the chapter 11 bankruptcy process to make chapter 11 bankruptcy more accessible to small businesses. To find out more about how subchapter V can help you restructure your small business debts without closing down your business, contact a Plantation bankruptcy lawyer.
Florida Leads the Nation in Subchapter V Bankruptcy Filings
As a response to the financial strain on businesses due to the pandemic, the federal government expanded eligibility for subchapter V filing to businesses with debts of up to $7.5 million, although before the pandemic, only businesses whose debts were less than $2.7 million were eligible. Subchapter V is an attractive option for small businesses, because applicants are exempt from some of the fees that a business would otherwise be required to pay. The best thing about subchapter V is that the court appoints a trustee to your case, rather than a creditor committee. This means that, unlike in other chapter 11 bankruptcy cases, the court can approve your plan for debt restructuring even if no creditors vote in favor of it.
It is unsurprising that debt-burdened small business owners are enthusiastic about subchapter V bankruptcy filings. This type of bankruptcy filing has seen the greatest amount of interest from Floridians. In 2022, 234 businesses in Florida filed for bankruptcy under subchapter V. The state with the second highest number of subchapter V bankruptcy filings was Texas, with 148 cases, followed by California, with 143 cases.
A Chapter 11 Bankruptcy Lawyer Can Help You Get Your Subchapter V Case Approved
If your small business is struggling with debts, even if these debts amount to several million dollars, filing for chapter 11 bankruptcy under subchapter V could be the best option. If you file for business bankruptcy, you should hire a bankruptcy lawyer to represent you, since your case will be more complicated than that of an individual who owns few assets and is filing for chapter 7 bankruptcy. The deadlines are short in subchapter V bankruptcy cases, which is why it is all the more important to work closely with a knowledgeable bankruptcy attorney.
Work With a Debt Lawyer About Small Business Bankruptcy
A South Florida debt lawyer can help you meet the eligibility criteria for subchapter V and file for chapter 11 bankruptcy and restructure your small business debts. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.
Source:
law.com/dailybusinessreview/2023/03/22/this-new-bankruptcy-filing-option-favors-small-businesses-and-florida-is-a-hot-spot/
