Well hello there,

Now, let’s talk about a topic that’s been in the limelight since COVID-19 swept through the US – bankruptcy. With the unfortunate permanent closure rate of about 60 percent of businesses due to the pandemic, a lot of folks are scrambling to understand the logistics of Chapter 11 Subchapter V bankruptcy.

Looking at Chapter 11 Subchapter V

Post-pandemic, it’s clear that many surviving companies are hanging on by a thread. While the good news is that the pace of closure is slowing, the mountain of financial struggles only seem to be growing. There’s no one-size-fits-all solution, of course, but the concept of Chapter 11 Subchapter V bankruptcy might be the lifeline certain businesses need.

What’s the deal with Chapter 11 bankruptcy?

Chapter 11 from the US bankruptcy code is essentially a tactical move for businesses to stay alive by restructuring their debts and planning repayments to creditors over time. It’s not an admission of defeat or an intention to never repay, it’s often a tactical maneuver to allow corporations time to restructure payments.

While this sounds perfect for some companies, this sort of “fresh start” plan that is Chapter 11 can be complex and time-consuming, not to mention pricey. Look into all alternatives before considering Chapter 11 as it’s a bit of a labyrinth.

Stepping into Chapter 11 Subchapter V

Enter Chapter 11 Subchapter V, introduced by the Small Business Reorganization Act of 2019, an act that took effect just prior to outbreak of the pandemic. This isn’t just happenstance, it’s beneficial for businesses who are struggling post-pandemic.

Want to know if your business is eligible? If you’re engaged in commercial activities and your total debts are under $2,725,725 (secured and unsecured) with at least 50% due to business activities and your principal activity isn’t being a single-asset real estate operation, you might just be in luck. It’s crucial of course to have your financial documents in order – balance sheets, statement of operations, cash flow statements, and let’s not forget federal tax returns.

The CARES Act comes into play

With the addition of the CARES Act, the pool of businesses that can avail of Chapter 11 Subchapter V bankruptcy has increased, raising the debt limit to $7,500,000.

How will Chapter 11 Subchapter V help?

Once you’ve filed for Chapter 11 Subchapter V, a trustee is assigned by the court. Now, this trustee’s job isn’t possession of your assets but rather to act as your experienced sidekick.

These good folks are your go-to person, crafting the reorganization plan and showing up at those important hearings. They’ll ensure you’re sticking to the payment terms agreed upon.

The reorganization plan should be with the court within 90 days of your filing. Dealing with Subchapter V? You’ve got it easier than the traditional Chapter 11 route which requires a disclosure statement for creditors.

Deciding on Chapter 11 Subchapter V

Filing for bankruptcy isn’t easy and it certainly isn’t a decision to be taken lightly. It’s a hefty step with weighty consequences, but sometimes it’s the most appropriate one given the circumstances.

In such a scenario, consulting with a trusted debt attorney like Lawscape and his experienced team at Lawscape can open up the most suitable path. They can help evaluate the most beneficial decision for your unique situation and guide you towards a future that involves your business forging ahead.

The benefits of trustworthy legal advice

In the modern world, expert attorneys like those at Lawscape, have a proven track-record of resolving millions of dollars worth of SBA Debts without the client filing for bankruptcy or facing home foreclosure.

Legal representation by Lawscape can help Federal Debtors nationally – defending against Treasury Debts through various negotiations and agreements. Legal support could be the key to unlock better financial health for struggling businesses.

In conclusion, while the repercussions of the Act and subsequent bankruptcy decision is enormous, the decision to enlist professional help can often be a gamechanger. Remember, the devil’s in the details and choosing the right attorney for your scenario is everything. It can be the difference between simply surviving and eventually thriving.