What Do Subchapter V Reorganization Plans Look Like?
If your small business is considering a Subchapter V bankruptcy case, it is important to know what to expect as you develop your reorganization plan. For small businesses in South Florida, it is critical, first, to know that the debt limits for Subchapter V changed recently — you should be aware of the debt limits and your eligibility before you begin thinking about your debt reorganization plan. As of June 21, 2024, to be eligible for Subchapter V, your business will need to have combined debts of less than $3,024,725. If you are still eligible for Subchapter V bankruptcy based on the new and reduced debt ceiling, and you meet other eligibility requirements, then you can begin thinking about your reorganization plan. Our West Palm Beach bankruptcy lawyers are here to assist you.
What is a Subchapter V Reorganization Plan?
Like the reorganization plan that is central to other types of reorganization bankruptcy, a Subchapter V reorganization plan will establish a payment plan for repayment of existing debts over a period of time, with the full repayment of secured and priority debts. As the US Department of Justice explains, there are differences between Subchapter V reorganization plans and those in other types of business bankruptcy cases, including traditional Chapter 11 cases. Most significantly, Subchapter V cases have “shorter deadlines for filing reorganization plans” to allow for “greater flexibility in negotiating restructuring plans with creditors.” The debtor still remains “in possession,” and can continue to operate the business while repaying creditors and, in some cases, even borrowing additional money if the court approves in order to keep the business running smoothly.
Details of a Subchapter V Reorganization Plan
There are various elements that go into a Subchapter V reorganization plan, and the precise contents and details of each plan will depend on the specific facts of the debtor’s case and the debtor’s financial circumstances. In general, however, you should anticipate for a Subchapter V reorganization plan to contain the following information:
- Description of the debtor’s business;
- Determination that all creditors will receive at least as much as they would if the debtor filed for Chapter 7 bankruptcy;
- Financial details clarifying that the debtor will have the ability to make the payments according to the reorganization plan without needing to undergo additional reorganization or restructuring;
- Details of the priority claims, secured claims, nonpriority secured claims, and equity security holders;
- Detailed classification of claims and interests;
- How executory contracts and unexpired leases will be handled;
- Means for the debtor to implement the reorganization plan;
- Effective date of the reorganization plan, its timeline, and other relevant details; and
- Details for discharge of remaining debts at the conclusion of the reorganization plan.
Contact Our West Palm Beach Bankruptcy Attorneys Today
Is your business considering a Subchapter V bankruptcy filing? If so, it is important to seek advice from an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller as soon as you can. We can discuss your eligibility with you, and we can assist you through the creation of your reorganization plan and all aspects of your Subchapter V case. Contact us today to get started.
Sources:
justice.gov/ust/subchapter-v
law.cornell.edu/uscode/text/11
