How the plan comes together
Subchapter V bankruptcy is a track within Chapter 11 for businesses, and individuals with business debts, below a debt ceiling that has changed over time. Only the debtor proposes the plan, and it generally must do so within a short deadline after filing that is hard to extend. A plan can be confirmed with creditor support or, if creditors do not agree, on a showing that the business will commit its projected disposable income to payments over the plan period. That alternative is what often lets owners keep the company without the new value contributions a traditional Chapter 11 case may require. A discharge usually follows plan completion when confirmation was not consensual.
The trustee and the reporting
A Subchapter V trustee is appointed to monitor the case and help the parties reach a consensual plan, and in a consensual case the trustee's role often ends sooner. The debtor still files regular operating reports, attends a status conference, and keeps insurance and taxes current. Prepare financial projections that show how the business will fund the plan, supported by historical revenue and expense records. Lenders and landlords often focus on whether those projections are realistic, so documentation matters. Owners should also gather information on personal guarantees, which the company's case does not resolve.
Checking the fit early
Before filing, we confirm that the business meets the current eligibility rules, including the debt ceiling and the requirement that at least half of the debt arose from business activity. We then look at whether cash flow can support a plan and which creditors are likely to object. Some businesses would do better with a negotiated workout or a sale, and we consider those alternatives as well. If Subchapter V fits, we plan the opening filings and the plan deadline from the start. The first discussion is about whether the numbers work, not just whether the company qualifies.
