Subchapter 5

Subchapter V Bankruptcy Lawyers in Phoenix

Serving Small Business Owners

At The Gavel, we have been guiding small business owners through bankruptcy for many years. Much of our success is due to the fact that we are always up-to-date on the latest developments in bankruptcy law, and we are quick to help our clients take informed, strategic steps forward.

In addition to having an in-depth and highly practical understanding of bankruptcy law, we provide unparalleled client service. While other firms send paralegals to deliver important information, our attorneys pick up the phone and call you themselves, or we invite you in for an in-person meeting. We also provide you with regular updates on your case, give you room to ask important questions, and make sure you always understand your options.

Don’t make any decisions until you’ve spoken to one of our Phoenix bankruptcy attorneys from The Gavel. We provide consultations in person and over the phone, and we can even provide same-day appointments when necessary.

Subchapter V of Chapter 11: The Small Business Reorganization Act

On February 19, 2020, the Small Business Reorganization Act (“SBRA”) was put into effect to make it easier for small business debtors to reorganize their affairs and spend less money on bankruptcy. The act added Subchapter V to Chapter 11 bankruptcy, exclusively available to small businesses that owe no more than $2,725,625*. At least half of this debt must have been accrued through business expenses, and the debt in question must concern more than just a single real estate asset.

*Per the CARES Act, businesses can file under Subchapter V if they owe up to $7,500,000. This temporary increase will sunset in March of 2021.

During the process, a Subchapter V trustee is appointed to facilitate the reorganization strategy. The trustee attends important hearings and makes sure the debtor begins implementing the plan as agreed. Unlike traditional Chapter 11, Subchapter V does not involve a creditors committee or disclosure statements. This saves small business filers both time and money during the bankruptcy process.

Call The Gavel at (602) 560-4679 or fill out our online contact form today. We look forward to helping your company overcome financial hardship as soon as possible.

How the SBRA Streamlines Chapter 11 Bankruptcy for Small Businesses

Before the SBRA was enacted, bankruptcy codes subjected small businesses to the same restrictions and requirements as large, complex corporations. Now, small businesses can use Subchapter V to file Chapter 11 much more quickly and with a greater likelihood of success.

Positive changes under the SBRA include:

  • No Approval Required by Creditors’ Committee: Small businesses may now have their restructuring plans approved without the matter being voted upon by a committee of their creditors. Historically, creditors’ committees have made it next to impossible for small businesses to have their restructuring plans approved.
  • Elimination of the Absolute Priority Rule: In traditional Chapter 11, the Absolute Priority Rule requires business owners to fully satisfy claims made by their senior creditors before paying junior creditors in any amount. Now, this rule does not apply, allowing small businesses to hold onto more of their ownership interests.
  • Shortened Deadlines: While small business debtors only have 90 days to present their restructuring plan (as opposed to the 300 days previously given), all elements of the Subchapter V process are substantially expedited. Shortening the time frame of the entire bankruptcy process theoretically allows business owners to obtain financial relief before their situation worsens.

There are several other ways in which the SBRA can help you restructure your small business debts more quickly and cost-effectively – and we are here to help you make it happen.

Why Choose The Gavel?

  • Business and individual solutions!
  • Custom tailored solutions for your case.
  • Accessibility to a legal team that is rooting for you.
  • High level of quality service & genuine care for your success.

Finding the Right Solution for Your Business

At The Gavel, we take the time to develop the right strategy for your company. You may wish to free yourself from the financial burden as soon as possible. Alternatively, you may be ready to do whatever it takes to reduce debt without going out of business. No matter the case, you can trust our team to tailor our services to your short- and long-term goals.

Call (602) 560-4679 or contact us online to schedule your complimentary consultation today.

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