There are a number of benefits to filing for Subchapter 5 bankruptcy. To learn more, read on and reach out to our firm today to speak with a dedicated Newburgh bankruptcy lawyer today.
What is Subchapter 5 bankruptcy?
Initially, this type of bankruptcy was restricted to businesses with $2.7M in total secured and unsecured debt, however, the Coronavirus Aid, Relief and Economic Security Act (“CARES ACT) passed in March 2020 allows businesses with collected debt up to $7.5M to qualify for Subchapter 5 in order to meet the needs of small businesses during these financially challenging periods. Small businesses must display that at least half of their pre-petition obligations originated from commercial business activities. Also, only businesses defined as “single asset real estate,” implying they derive all income from the operation of a single piece of real estate substantially, are not eligible.
If you have more questions about Subchapter 5, do not wait to reach out to our experienced New York bankruptcy attorneys. We are just one call away.
What are the benefits of Subchapter 5 bankruptcy?
There are a number of different benefits that Subchapter 5 provides. This is because it supplies a more efficient and economical way to negotiate a Plan of Reorganization with your creditors, including the following:
- No unsecured creditor committee;
- No quarterly U.S. trustee fees;
- No absolute priority rule. Equity holders maintain their equity in the company without needing to add new capital;
- Reorganization plan confirmation is possible without agreement by creditors as long as criteria are met that include equitable treatment of creditors.
Reach out to our firm today. Our legal team can work to assess your company’s business and specific issues it is facing to determine if this is a possible tool to help your business prevail. Our experienced bankruptcy attorneys will guide you through the entire process from filing to confirmation of a Subchapter 5 Plan in order to seem a more prosperous business. Give us a call today to get started. We are on your side.
How can I file for this type of bankruptcy?
Recognize that Subchapter 5 is a streamlined form of Chapter 11 of the Bankruptcy Code. It is created by filing a Chapter 11 petition and selecting Subchapter 5. Then, the small business debtor files documents with the court, including a current balance sheet and statement of operations. Recognize that a plan of reorganization must be filed within 90 days from the date of filing the petition. A Subchapter 5 U.S. trustee is assigned to overlook the small business debtor’s plan of reorganization.
CONTACT A BANKRUPTCY LAWYER TO DISCUSS YOUR DEBT OR COLLECTION ISSUE
Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.