Subchapter V Small Business Bankruptcy Cases

The Case

Neligan LLP has successfully helped small business owners reorganize under Subchapter V of Chapter 11 of the Bankruptcy Code, which allows small business owners with less than $7.5 million in debt to reorganize under Chapter 11 much more efficiently than a larger business.  The debt threshold for Subchapter V small business cases was increased to $7.5 million as part of the Covid relief packages approved by Congress and has been extended through June 21, 2024.  After that date, unless the increased debt threshold is extended again, the threshold will revert back to  the $3.024 million threshold contained in the Bankruptcy Code.  Therefore, it is to a small business owner’s advantage to file a bankruptcy case to reorganize under Subchapter V before the $7.5 million threshold expires.