Webpronews reports a 73% increase in corporate bankruptcies for 2025, with business bankruptcy filings reaching their highest monthly level since 2020.
At Shenwick & Associates, we have observed this increase and wish to review the various types of bankruptcy available to businesses.
Chapter 7 Bankruptcy involves the liquidation of a business by a Chapter 7 Bankruptcy Trustee. The Trustee closes the business and liquidates any assets for the benefit of creditors. However, the Chapter 7 bankruptcy trustee can also commence avoidance actions (preference and fraudulent conveyance actions) and sue the corporate debtor's shareholders if they have used business assets for personal expenses.
Chapter 11 Bankruptcy can involve reorganization or liquidation of assets by existing management. Unfortunately, Chapter 11 reorganizations require filing a plan and a disclosure statement, as well as soliciting votes to confirm a plan. This process can be extremely expensive, often prohibitively so for small businesses. A business can also use a Chapter 11 filing for liquidation by existing management.
Subchapter V Bankruptcy is a type of Chapter 11 bankruptcy filing for small businesses. The maximum debt is $3,424,000, and at least 50% of the debtor’s total debts must stem from commercial or business activities. Only small business debtors (which may include individuals or entities) may file under Subchapter V. Subchapter V is a simplified form of Chapter 11 filing; a debtor only needs to file a plan, not a plan and disclosure statement.
Chapter 13 Bankruptcy is for individuals only.
People with questions about what type of Bankruptcy to file can call Jim Shenwick, Esq
Jim Shenwick, Esq 917 363 3391 jshenwick@gmail.com
Please click the link to schedule a telephone call with me.
https://calendly.com/james-shenwick/15min
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