Small Business Bankruptcy Lawyer in Yuma
Taking Full Advantage of Chapter 11: Subchapter V
For decades, Chapter 11 bankruptcy has been a powerful legal device for corporations and other large business entities. They could use Chapter 11 to halt collection actions and reorganize their finances while remaining in business.
But Chapter 11 is the most expensive and complex form of bankruptcy, which is why it has only been beneficial for companies with substantial resources. Small businesses owners, meanwhile, have been left without a practical method of rescuing their companies from financial ruin.
In August of 2019, however, Congress addressed this issue. Legislators passed the Small Business Reorganization Act (SBRA), which added Subchapter V to Chapter 11 bankruptcy. As of February of 2020, qualifying small businesses have exclusive access to this streamlined, affordable version of Chapter 11.
What Are the Benefits of Subchapter V?
If you owe less than $2,725,625 (or less than $7,500,000 until March of 2021, per the CARES Act), and you accrued at least 50% of this debt through commercial expenses, you can qualify as a small business and file under Subchapter V.
You will then have access to the following benefits:
- No disclosure statements or creditors’ committees (which take time, cost money, and provide more opportunities for contested matters and adversarial proceedings)
- No need to obtain repayment plan approval from creditors (although their approval can benefit your case in certain ways)
- The potential opportunity to modify the mortgage on your primary residence (if you took out the mortgage to fund your business operations, rather than to acquire the residence)
- A Subchapter V trustee who oversees the process and facilitates the repayment plan (rather than earning portions of your liquidated assets, as they do in regular Chapter 11 cases)
- A more expedited process, taking as little as a few months to complete (versus several years in many Chapter 11 cases)
- Elimination of the Absolute Priority Rule (which mandated repaying all creditors in full before business owners and interest holders could retain assets and equity)
- The opportunity for a debt discharge (which will occur either: 1) upon confirmation, if the plan was approved by creditors, or 2) after completing all payments in the first 3 years of the plan, if the plan was not approved by creditors)
Ultimately, Subchapter V can allow countless small businesses to afford Chapter 11 bankruptcy. Through this process, they can reorganize and reduce debt without losing their companies.
He aggressively, but tactfully, fought for my voice to be heard in court and he went the extra mile.- David K.
I highly recommend them if you need to file bankruptcy.- Bob R.
Mr. Hineman was very helpful.- Walter R.
If you're in trouble, do not hesitate to call on Mr. Hineman's help.- Kristian H.
If you want a fantastic lawyer, Mr. Hienman is your man.- Belinda G.
Over 30 Years of Legal Experience
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Phil Hineman has been providing bankruptcy, family law, and criminal law services for the community for over 25 years. Reach out to discuss your case today.