Small Business Bankruptcy Lawyers in Jacksonville
Helping You Obtain Financial Relief Under Subchapter V
Is your small business struggling to stay afloat? You might be looking for ways to reduce your company’s debt without going out of business. If you’ve decided you need to file bankruptcy, you generally have two options: Chapter 7 and Chapter 11. However, Chapter 7 will likely liquidate your business, and Chapter 11 has historically been too complex and expensive for small businesses to navigate.
Fortunately, Congress added a new section to Chapter 11, and it became available in February of 2020. This new section is called Subchapter V, and it is only available to small businesses that owe no more than $2,725,625 (although the CARES Act temporarily increased this threshold to $7,500,000 until March of 2021). To qualify, at least half of the debt must have been accrued through business or commercial expenses.
Subchapter V is a streamlined, cost-effective version of Chapter 11, and it allows small companies to restructure and reorganize their debt without going out of business. Our Jacksonville bankruptcy attorneys at Edwards & Edwards, P.A. consider it a privilege to help business owners like yourself take full advantage of this new form of bankruptcy, and we are fully prepared to protect your rights and best interests every step of the way.
The Subchapter V Process
Like Chapter 13, Subchapter V is a form of debt reorganization, but it is for business entities instead of individuals. When you file under Subchapter V, you will propose a reorganization and repayment plan that will most likely take 3-5 years, and it must use all your projected disposable income.
Here are a few key differences between Subchapter V and regular Chapter 11:
- Subchapter V only allows the debtor to propose a plan. In a regular Chapter 11 case, creditors may propose a repayment plan on behalf of the debtor.
- The court can approve a Subchapter V plan without consent from creditors. In regular Chapter 11 cases, creditors must approve repayment plans before they move forward. Creditor approval in Subchapter V is not mandatory, but keep in mind that it may expedite the relief you receive.
- Subchapter V does not require creditor’s committees or disclosure statements. Both of these are time-consuming and costly, and the elimination of these requirements is why Subchapter V is a more streamlined and manageable version of Chapter 11.
- Subchapter V does not implement the Absolute Priority Rule. Chapter 11’s Absolute Priority Rule prevents equity holders and shareholders from retaining ownership interests unless all creditors are repaid in full. Without this rule, Subchapter V is similar to Chapter 13, in that the filer can retain their assets even if some of their creditors are not fully repaid.
- The Subchapter V process is much faster than Chapter 11. After you file your Subchapter V petition, you must submit your plan within 90 days. The process of obtaining court approval only takes a few months after you submit your bankruptcy petition.
Overall, Subchapter V is much more suited to small businesses than regular Chapter 11. If your goal is to obtain financial relief without going out of business, Subchapter V may be the solution you need—and Jacksonville bankruptcy attorneys at Edwards & Edwards, P.A. is fully prepared to assess your eligibility and help you obtain this relief as soon as possible.
Whether you are struggling with business debts, personal debts, or both, financial hardship is stressful in more ways than one. Our goal at Edwards & Edwards, P.A. is to lift the burden off of your shoulders so you can focus on achieving your goals and building a better future. With more than 50 years of combined legal experience, we have what it takes to develop a fully customized strategy with the highest possible likelihood of success.
Over 50 Years of Combined Experience
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