Wednesday, February 17, 2021

Bankruptcy Subchapter V Debt Limits


In February 2020, Congress passed a new law establishing a new small business bankruptcy filing subchapter, known as “Subchapter V”. The original debt limit for Subchapter V was $2.7 million, however, in March 2020, the CARES Act increased the debt limit to $7.5 million for one year. 

Unless Congress renews the $7.5 million debt limit established last March, the debt limit will revert back to $2.7 million on March 27, 2021.

Subchapter V was designed to be a fast track, cheaper alternative, to traditional chapter 11’s for business. The law is extremely helpful for restaurants, retailers, and other small businesses who prefer reorganization to liquidation or shutting down. 

In a prior blog post at we discussed many of the benefits of Subchapter V:   

If a small business has debt that exceeds $2.7M and they want to file under Subchapter V, they must file their bankruptcy petition on or before March 27, 2021, unless Congress raises the debt limit.  

Any individuals or businesses with questions about Subchapter V should contact Jim Shenwick: (212) 541-6224;

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