Chapter 11 and Subchapter V: a path forward for a small business

Start with the business question

A reorganization needs more than a legal route. It needs a credible account of what the business can earn, what it must spend, and how a restructuring could change that position. Start the conversation with a short cash forecast, a list of secured debts, and the contracts the business depends on. These are planning suggestions, not filing requirements.

Where Subchapter V fits

Chapter 11 is the federal reorganization framework. Subchapter V is a route within Chapter 11 for eligible small business debtors, with distinct procedures and a trustee. It is not a separate chapter, and eligibility must be checked against the law in force on the filing date.

The U.S. Trustee Program maintains Subchapter V resources. Use those alongside advice about the particular business, its debt structure, and the applicable eligibility rules.

A timetable to take seriously

Section 1189 generally gives the debtor 90 days after the order for relief to file a Subchapter V plan. An extension has a statutory condition; it is not something to assume will be available. Only the debtor may file the plan under that section.

Questions for the first meeting

• What would make the underlying business viable after restructuring?
• Which obligations belong to the company, and which are personally guaranteed?
• What eligibility evidence and current debt limits must counsel verify?
• What work must be finished before a petition, and what is the realistic budget?