Jupiter Subchapter V Bankruptcy Lawyer

Helping Clients in Palm Beach County And Throughout Florida During Financial Crises

Filing for bankruptcy is no small matter and requires the professional skill and attention of an experienced bankruptcy litigator. Julianne Frank, Esq. has a great track record with bankruptcy litigation and dedicates her bankruptcy practice to saving struggling small businesses. In fact, Attorney Frank was one of the first lawyers in the country to file Subchapter V, so you can trust that she has the knowledge and experience with Subchapter V litigation to deftly handle your case.

Jupiter, FL: Navigate Subchapter V Bankruptcy with Confidence

Expert Bankruptcy Guidance for Palm Beach County Businesses

Understanding the Small Business Reorganization Act in Jupiter, FL

The Small Business Reorganization Act went into effect on February 19, 2020 and added a new subchapter V to Chapter 11 designed to make bankruptcy easier for small businesses.

The statute defines eligible small business as “entities with less than about $2.7 million in debts that also meet other criteria,” according to the U.S. Department of Justice, and the act:

• Imposes shorter deadlines for completing the bankruptcy process

• Allows for greater flexibility in negotiating restructuring plans with creditors

• Provides for a private trustee who will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization

Be aware that entities that derive substantially all their income from operating a single real property are ineligible for Subchapter V. Also, Subchapter V does not repeal existing Chapter 11 provisions regarding small business debtors; instead, it creates an alternative procedure that small business debtors may elect to use.

Who Is Eligible For Subchapter 5?

In Florida, businesses that meet certain eligibility requirements may be eligible for Subchapter V.

To be eligible, the debtor must:

• Be a small business: To qualify, the business must have aggregate noncontingent liquidated secured and unsecured debts of no more than $7.5 million.
• Be engaged in commercial or business activities: The business must be primarily engaged in commercial or business activities, and must not be a single asset real estate debtor.
• Seek reorganization: The business must be seeking to reorganize its debts and continue operating.
• Have a debtor in possession: The business is allowed to remain in possession and control of its assets and operations, which means it must have a debtor in possession to manage the bankruptcy proceedings.
• Have a plan of reorganization: The business must propose a plan of reorganization that complies with the requirements of Subchapter V.

If a small business meets these eligibility requirements, Subchapter 5 may be a viable option for debt relief and reorganization. However, it's important to consult with an attorney in Florida who can assess your individual situation and help you determine the best course of action.

Get experienced guidance for your small business bankruptcy by speaking with a Florida subchapter V lawyer at Julianne Frank, Esq.. We can ensure that you meet all legal requirements for eligibility and reorganization. Contact us online or call (561) 220-2528 for an evaluation.

What Is The Difference Between Chapter 11 and Subchapter V?

Subchapter V allows a debtor to spread its debt over 3 to 5 years, during which time the debtor must devote its projected disposable income to paying creditors.

Generally, this benefits both debtors and creditors, as it allows debtors to spread payments over time and allows creditors an available recovery from debtors who have a realistic expectation of income over time. In a traditional Chapter 11 case, administrative expenses must be paid at plan confirmation, but under Subchapter V, they may be paid over the life of the plan.

Comparing Chapter 11 and Subchapter V for Palm Beach Businesses

Subchapter V is generally a faster, more efficient bankruptcy process. A plan of reorganization must be filed with the bankruptcy court within 90 days of the commencement of the proceeding. However, the bankruptcy court may extend this deadline under special circumstances a debtor should not be held accountable (e.g., COVID-19).

In addition, certain documents like disclosure statements do not need to be drafted as they would in a traditional Chapter 11 bankruptcy.

Subchapter V restructurings are similar to Chapter 11 bankruptcies in that businesses or individuals with primarily business debt have the option to either:

• Selling off assets to reduce debts

• Funding a reorganization plan with future income

• Conducting a liquidation of desired assets

The plan of organization must be feasible and fair, filed in good faith, and in the best interest of the creditors. Subchapter V businesses also have the protection of the bankruptcy court and can receive appropriate flexibility from creditors.

Role of Subchapter V Trustees in Jupiter, FL

Regarding the role of the trustee, under Subchapter V, a trustee is automatically appointed, but the debtor retains control of its assets and operations. Creditors’ committees are formed only for cause in Subchapter V cases, in contrast to Chapter 11 cases.

Advantages for Small Business Owners Filing Subchapter V in Palm Beach

Subchapter V also cushions small business owners from certain personal consequences that might discourage a Chapter 11 filing. For instance, if the debtor’s principal used their primary residence as security for a loan to fund the small business, the debtor’s plan may modify the loan. Additionally, Subchapter V also does not require equity holders to provide “new value” if they want to retain their equity interest in the business.

Call (561) 220-2528 or contact Julianne Frank, Esq. online to discuss your case with an experienced professional in Subchapter V. We serve businesses throughout Palm Beach and Florida.

Some Pros & Cons Of Subchapter V On Small Businesses in Palm Beach Florida

The coronavirus pandemic may have pushed small businesses that only recently been financially stable to consider bankruptcy options, including Subchapter V. While bankruptcy filings, especially in the Chapter 11 category, are lengthy and not always advised, an unprecedented pandemic may warrant the necessity to file. Filing for Subchapter V of Chapter 11 can allow small businesses to pause their financial and business obligations momentarily to negotiate with lenders, landlords, and other creditors.

Small businesses should be careful about filing for Subchapter V if they are uncertain, though, because the process will require extensive time and research into the necessary financial documents to move forward in the legal process efficiently. Additionally, note that the U.S. Small Business Administration indicates that applicants subject to a bankruptcy proceeding are ineligible for the Paycheck Protection Program (PPP).

Call (561) 220-2528 to See If Subchapter V is Right For You

If you are looking to file for bankruptcy under Subchapter V of Chapter 11, it is very important that you consult an experienced bankruptcy lawyer about your next steps. Julianne Frank, Esq. has extensive experience working with struggling small businesses in Jupiter, Florida with bankruptcy litigation, and you can be sure that she will put her skill and knowledge to use in your case. However, be prepared to devote plenty of time to the litigation process, as the success of your case will depend on your ability to go the extra mile with Attorney Frank as you walk her through your financial documents and other relevant asset information.

• Related Reading: When To File Chapter 11

For more information about Subchapter V, schedule an appointment by dialing (561) 220-2528 or completing our online form.