To learn more about the benefits of filing Subchapter 5 bankruptcy, continue reading and reach out to our firm today to speak with an experienced Orange County Chapter 11 bankruptcy lawyer. Our legal team will not let you navigate this process alone. Give us a call to get started.
What is subchapter 5 bankruptcy?
Initially, this was limited to businesses with $2.7M in total secured and unsecured debt, however, the Coronavirus Aid, Relief and Economic Security Act (“CARES ACT) enacted in March 2020 permits businesses with accumulated debt up to $7.5M to qualify for Subchapter 5 in order to satisfy the needs of small businesses during these financially difficult times. Small businesses are mandated to demonstrate that at least half of their pre-petition deficits originated from commercial business activities. Furthermore, only businesses described as “single asset real estate,” meaning they emanate substantially all revenue from the operation of a single piece of real estate, do not qualify.
To learn more about Subchapter 5, it is in your best interest to reach out to our skilled New York bankruptcy attorneys. Our legal team is here to help.
What are the advantages of Subchapter 5 bankruptcy?
There are a number of different benefits that Subchapter 5 offers. In fact, it provides a more efficient and economical way to negotiate a Plan of Reorganization with your creditors, including the following:
- No quarterly U.S. trustee fees;
- No unsecured creditor committee;
- 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.
Our firm can evaluate your company’s business and certain issues it is facing to decide if this is a possible means to help your business survive. Our skilled bankruptcy attorneys will advise you through the entire process from filing to confirmation of a Subchapter 5 Plan in order to appear a more successful business. Reach out to our firm today to get started. A Newburgh bankruptcy lawyer is just one call away.
How do I file?
It is important to note 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. Keep in mind 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 oversee 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.