What to Know About the ABI’s Subchapter V Task Force Report
Subchapter V bankruptcy has become an important tool for small businesses in Florida and throughout the country. As a subchapter of Chapter 11 bankruptcy, Subchapter V provides the same reorganization benefits but in a type of bankruptcy case that is more streamlined, less expensive, and less complex than a traditional Chapter 11 case. With the recent expiration of the As small businesses acknowledged that the debt ceiling for Subchapter V was about to decrease significantly given that a provision in the Bankruptcy Threshold Adjustment and Technical Corrections Act would be sunsetting in June 2024, many more businesses took advantage of the increased debt ceiling and filed for Subchapter V bankruptcy. Indeed, data from Epiq AACEr revealed that Subchapter V filings rose by as much as 16 percent between May 2024 and the previous year.
The debt limit for a Subchapter V filing has now dropped to $3,024,725. However, it is possible that lawmakers could still take action to amend the debt ceiling, especially given the recent recommendations from the American Bankruptcy Institute (ABI) Subchapter V Task Force final report. What should you know about the information in the final report, and the ABI task force’s findings? Our West Palm Beach bankruptcy attorneys can tell you more.
ABI Task Force Recommends the $7.5 Million Debt Ceiling for Subchapter V
One of the most important findings of the ABI Subchapter V Task Force, given the recent inaction by Congress to keep the extended debt ceiling, was for the Subchapter V debt limit to be kept at $7,500,000, and to be adjusted for inflation. Although the debt limit has already reverted, federal lawmakers could still act in order to permanently change the debt limit so that it is in line with the ABI’s recommendation.
Duties of Subchapter V Trustees
In Subchapter V cases, the bankruptcy trustee plays a key role, and it is critical for trustees to be consistent in handling cases. In traditional Chapter 11 cases, the debtor also takes on the role of “debtor in possession,” which requires the debtor to handle many of the responsibilities that a trustee would handle in a Chapter 7 bankruptcy case, for example.
While a debtor in a Subchapter V case does still remain in control of their business like a debtor in a Chapter 11 case, the Subchapter V trustee oversees aspects of the debtor’s business and can play a central role in helping the debtor to create a viable reorganization plan. The ABI report made recommendations that emphasized the importance of continued training for Subchapter V trustees, and recommended clarification of the Subchapter V trustee’s duties, including duties concerning mediation.
Whether any of the recommendations, including those discussed above along with others, will be included in future laws will depend on lawmakers.
Contact a West Palm Beach Bankruptcy Attorney Today
If you have any questions about filing for Subchapter V bankruptcy, or if you want to begin the process of preparing to file for Subchapter V bankruptcy in South Florida, our attorneys are here to help. Do not hesitate to get in touch with one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller to begin working on your bankruptcy case. Contact us today for assistance.
Sources:
subvtaskforce.abi.org/
autoremarketing.com/bhph/total-bankruptcy-filings-jump-16-in-may/
