Bankruptcy is a legal process that can help individuals and businesses eliminate or repay their debts under the protection of the bankruptcy court. One type of bankruptcy that has recently gained attention is Subchapter 5 bankruptcy under Chapter 11. This bankruptcy option is designed to make it easier and less expensive for small businesses to restructure their debts and remain in operation.
- Streamlined Process Subchapter 5 bankruptcy was introduced in 2019 as part of the Small Business Reorganization Act. This bankruptcy option streamlines the process for small businesses by eliminating many of the time-consuming and costly requirements associated with traditional Chapter 11 bankruptcy. With Subchapter 5, businesses can file a bankruptcy plan that is subject to court approval, without the need for creditors to approve the plan.
- Lower Cost Another significant benefit of Subchapter 5 bankruptcy is its lower cost compared to traditional bankruptcy options. For example, under Subchapter 5, the debtor does not need to pay a quarterly fee to the United States Trustee, which is required in traditional Chapter 11 bankruptcy. Additionally, the filing fee for Subchapter 5 is lower than the fee for traditional Chapter 11 bankruptcy.
- Debt Relief Subchapter 5 bankruptcy also provides debt relief for small businesses. The bankruptcy court can modify certain secured debts, reduce interest rates, and even eliminate some debts entirely. This can be a significant benefit for small businesses struggling to pay their debts.
- Retention of Business Ownership Subchapter 5 bankruptcy allows small business owners to retain ownership of their businesses while still restructuring their debts.
If you feel subchapter 5 might be right for you, please call us at (804) 423-1382 and speak with one of our bankruptcy professionals today.
