What Are the Pros and Cons of Subchapter V Bankruptcy in Florida?
As you may know, Subchapter V was created in 2019 through the Small Business Reorganization Act (SBRA), and it went into effect in February 2020. The aim was for smaller businesses to have a more streamlined reorganization bankruptcy option. Subchapter V is a subchapter of Chapter 11, which means it is a form of reorganization bankruptcy, but it is designed specifically for smaller business debtors to have an easier time going through the reorganization bankruptcy process and restructuring business debt. If your South Florida business is considering bankruptcy, you may be wondering about the pros and cons of this type of bankruptcy, and whether or not it is a type of bankruptcy your business should consider.
Generally speaking, there are few reasons your business should consider Subchapter V if it meets the eligibility requirements. Our bankruptcy lawyers in West Palm Beach can tell you more about the benefits and limitations of Subchapter V to consider.
Pros of a Subchapter V Filing
There are many benefits of a Subchapter V bankruptcy filing for small business debtors, and certainly more pros than cons. The following are some of the most significant benefits of a Subchapter V bankruptcy (in comparison with a traditional Chapter 11 case):
- Streamlined process for filing, which means a shorter timeline, and no requirement to have a creditors’ committee to approve your proposed reorganization plan;
Limitations of a Subchapter V Bankruptcy Case
While there are relatively few limitations of Subchapter V for a business that is eligible for this type of bankruptcy, it is important to consider the following potential cons of a Subchapter V case:
- Shorter timeline than a traditional Chapter 11 case (proposed repayment plan is required from 90 days of filing, versus 120 for a traditional Chapter 11 filing), which can sometimes be a benefit but may also be a limitation if the business is having difficulty finalizing the repayment plan; and
- Limited case law (given that Subchapter V has only been around since 2020), which can mean greater uncertainty in the event a dispute or legal issue arises in a Subchapter V case.
Contact Our West Palm Beach Bankruptcy Lawyer Today
Is your business struggling with debt and considering a reorganization bankruptcy filing in South Florida? If so, it is important to seek legal advice as soon as you can to determine your business’s eligibility for Subchapter V. This is a type of streamlined, lower cost reorganization bankruptcy that has already been able to help many small businesses across the country. One of the experienced West Palm Beach bankruptcy attorneys at Kelley, Kaplan & Eller can speak with you today to learn more about your business’s financial circumstances and to help you determine your business’s eligibility for a Subchapter V filing. Once you are ready to file, our firm can assist you. Contact us today for more information.
Source:
justice.gov/ust/subchapter-v
