Wednesday, May 11, 2022

SubChapter V Bankruptcy for Small Business an Update

 SubChapter V, the new small business chapter 11 bankruptcy is approximately 2 years old. Congress’s goal was to create a less costly form of  reorganization for small businesses.  For many small businesses, Chapter 11 filings were too expensive. SubChapter V combines elements of chapters 13 (which is only for individuals) and 11.

We wrote about SubChapter V on our blog at

A recent article at Bloomberg titled “Analysis: Four Statistical Snapshots of Subchapter V’s 1st Year can be found at

The Bloomberg article states that since the first case was filed in the Middle District of Tennessee on Feb. 19, 2020, a total of 1,643 bankruptcies were filed pursuant to Subchapter V.

 The Middle District of Florida had the most Subchapter V cases filed during its first year with more than 140 cases.  Florida, California, and Texas rounded out the top five.

According to the article, approximately 50 Subchapter V cases were filed in the SDNY and 50 in the EDNY.

A recent article at JD Supra titled Subchapter V Changed The Chapter 11 Bankruptcy Landscape – How Should A Creditor Protect Itself? Which can be found at  details how creditors can protect themselves if they are involved in a Subchapter V case.

At Shenwick & Associates, we filed one Subchapter V case and then quickly moved to convert that case to chapter 7 due to, in our opinion, a difficult to deal with and inexperienced Subchapter V Trustee. Unfortunately SubChapter V requires that a Subchapter V Trustee be retained in the proceeding and the Debtor has no control over who that trustee will be.

Subchapter V remains a work in progress and only time will tell if this new version of chapter 11 will be successful!

Attorneys, accountants or debtors who have questions about Subchapter v or small business reorganizations should contact Jim Shenwick, Esq 212 541 6224

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