Can My Restaurant File for Subchapter V?

Restaurants can be extremely difficult businesses to run, especially in South Florida where customers tend to be more plentiful in the fall and winter months than the spring and summer months due to the “snowbird” phenomenon. Snowbirds are part-time residents of the state of Florida who travel south for the winter to stay in a warmer climate, and then return to their other part-time home in the spring and summer. As an article in Money explains, not only is the typical population of snowbird retirees currently living in the state during the colder months of the year, but the pandemic also resulted in a trend toward “young snowbirds.” In other words, more and more part-time winter residents of South Florida are younger with full-time jobs, and many have the flexibility to live in Florida for half of the year since they work remotely.

These population and real estate trends impact businesses, and restaurants especially. As such, restaurants in South Florida might be struggling with debt, yet might have plans for increasing revenue during the high season. For many of those restaurant owners, a reorganization bankruptcy is the type of bankruptcy that they want to file since it allows businesses to stay open while restructuring debts and getting back on track with creditors. If you are a restaurant owner in West Palm Beach or a nearby area and are considering a reorganization bankruptcy, you may be wondering: can my restaurant file for Subchapter V? Our West Palm Beach bankruptcy attorneys can provide you with more information.

What is Subchapter V? 

Subchapter V is a subchapter of Chapter 11 bankruptcy that was established in 2019 and allows a debtor to reduce bankruptcy costs and to go through a more streamlined bankruptcy case. It’s typically used by small businesses with limited amounts of debt.

Which Restaurants Are Eligible for Subchapter V? 

Is your restaurant eligible for a Subchapter V bankruptcy case? In order to be eligible to file, the following must be true of your restaurant:

• 1) Must be engaged in commercial or business activities other than operating a single piece of real estate (this requirement is usually easy for restaurants to meet);
• 2) Not less than 50 percent of your combined debts must have arisen from commercial or business activities (this is also a requirement that is usually easy for restaurants to meet); and
• 3) Must have combined secured and unsecured debts of $7,500,000 or less.

Contact a West Palm Beach Bankruptcy Attorney Today 

If you have any questions about filing for Subchapter V bankruptcy or any other type of business bankruptcy, one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller can speak with you today about your options. Businesses frequently have a range of options when it comes to bankruptcy filings, and depending upon the size and type of your business, as well as the amount of debt your business has, you could be eligible for a form of reorganization bankruptcy that is less complicated and expensive than a traditional Chapter 11 case. Contact us today for more information.

Sources:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics#:~:text=In%20order%20to%20file%20a,from%20the%20commercial%20or%20business

money.com/pandemic-snowbirds-remote-work-trend/