Inc. is reporting that business bankruptcy filings increased by 30%. The article can be found at https://www.inc.com/melissa-angell/small-business-bankruptcies-surged-30-percent-this-past-year-will-tariffs-accelerate-that/91221717
Michael Hunter of EPIC is quoted in the article as stating that the cause of this increase is a constellation of factors: including higher interest rates, inflation, record debt, and global geopolitical uncertainty.
Interestingly, Mr. Hunter also states that bankruptcy filing will continue to rise for the rest of 2025 and 2026.
Most small businesses file under Subchapter V (of chapter 11) which is simpler and more affordable than chapter 11.
The Subchapter V debt limit is presently $3,424,000.00.
-Subchapter V provides a simplified reorganization process with shorter deadlines, such as a plan filing deadline within 90 days of the bankruptcy filing
-Subchapter V cases eliminate certain expenses such as no United States Trustee quarterly fees and no creditor committees unless ordered for cause.
-Only the debtor may file a reorganization plan in Subchapter V
-Subchapter V does not require a separate disclosure statement, reducing administrative burden and costs.
-Subchapter V eliminates the "absolute priority rule," allowing owners to retain equity even if creditors are not paid in full, and permits confirmation without creditor class acceptance as long as the plan is fair and equitable.
- A Subchapter V Trustee is appointed to assist the debtor and facilitate negotiations with creditors, but does not operate the business.
Clients or professionals with questions about business reorganizations or Subchapter V should contact 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
We help individuals & businesses with too much debt!
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