Bankruptcy is an intimidating process that involves great consideration and care. With the recent expansion of the Bankruptcy Code, to include Subchapter V to Chapter 11, under the SBRA and expanded under the CARES Act, small business owners find themselves with a new opportunity to emerge from financial hardship instead of facing liquidation. While the first step towards emerging from Bankruptcy is filing, there is much to consider before making that monumental move.
How Do I Prepare for Subchapter V Bankruptcy?
Bankruptcy is invasive. It is a public process, and small business owners often find the loss of control difficult to manage. Bankruptcy is a challenging, dramatic decision, and should be a thoughtful choice after considering all other options. Consulting with a knowledgeable attorney and financial advisor is critical to success.
The first step in preparing for Subchapter V Bankruptcy is to ensure that you meet the qualifications. Business debtors engaged in a business or commercial activity that have noncontingent, liquidated debt under $7.5 million are eligible. Note that this limit is in place until early 2021, when the limit will return to approximately $2.7 million. Single-asset realty cases are not eligible to file under Subchapter V.
