Arlington Chapter 5 Bankruptcy Attorney

Lawyers Helping Small Businesses With Debt Reorganization in Tarrant County, TX

Businesses that are struggling with debt have historically had two options for seeking bankruptcy protection, and in some cases, neither is truly viable. A Chapter 7 bankruptcy requires a business to liquidate assets to repay creditors, so most businesses try to avoid this option. However, many small businesses also struggle to meet the requirements of a Chapter 11 bankruptcy. The Small Business Reorganization Act of 2019 has provided businesses with another option by creating a new form of bankruptcy under Subchapter V of Chapter 11 of the United States Bankruptcy Code. When pursuing a "Chapter 5 bankruptcy"—as it has become known—a business owner should work with an attorney who has a full understanding of the requirements and procedures followed under this new law.

At Acker Warren P.C., our team has assisted hundreds of businesses and individuals in filing for bankruptcy. With over 20 years of combined legal experience and an understanding of how the bankruptcy laws apply in your case, our attorneys can assist your business with addressing its debts and meeting the requirements for reorganization. We will work with you to complete the bankruptcy process successfully and ensure that your business is set up for long-term for success.

Benefits of Chapter 5 Bankruptcy

A Chapter 5 bankruptcy is available for businesses that are considered "small business debtors," meaning that their total unsecured debts are under the threshold set by the federal legislature. This type of bankruptcy is meant to simplify and streamline the reorganization process for eligible businesses in the following ways:

• As with a Chapter 11 bankruptcy, debtor-in-possession rules are followed, allowing a business owner to remain in possession of business assets and continue operating the business. However, a trustee will be appointed who will assist in the reorganization process and disburse payments to creditors.
• Unlike a Chapter 11 bankruptcy, a committee of creditors will not be appointed unless the bankruptcy court believes there is good cause to do so. This will help reduce costs for the debtor by eliminating the fees and expenses related to the professionals who serve on this committee.
• The debtor must submit a reorganization plan within 90 days of filing the petition for bankruptcy. Creditors are not able to submit their own plans. The debtor's plan must detail how the debts will be paid over a period of three to five years. In most cases, a debtor's plan will be approved, even if creditors object, as long as it is feasible and fair and equitable to creditors. The plan must also provide that all disposable income earned by the business will be used to make payments under the plan.
• Debtors are generally not required to file a complete disclosure statement as they would be required to do in a Chapter 11 bankruptcy. Instead, the reorganization plan must include some of the information that would be addressed in a disclosure statement, including a history of the company's operations, an analysis of the proceeds that could be received from liquidating the business's assets, and a financial projection that shows that the business will be able to make payments to creditors under the proposed plan.

Understand Your Available Options

If your small business is struggling to repay debts, you may be unsure about your options, and you may be concerned about your ability to continue operating your business after filing for bankruptcy. Fortunately, the new options of Chapter 5 bankruptcy could allow you to complete the process of reorganization and put a plan in place for repaying your debts while maintaining your business operations. The attorneys at Acker Warren P.C. can help you understand whether Chapter 5 bankruptcy is right for you, and we will work with you to complete the bankruptcy process successfully.

Call 817-752-9033 for a Free Consultation

For more information about filing for bankruptcy under Subchapter V of Chapter 11, contact our office. Call us at 817-752-9033 to schedule your free consultation and case analysis today. Our team serves small business owners throughout North Texas.