Understanding Subchapter V Bankruptcy

Understanding Subchapter V Bankruptcy: A Small Business Guide

As Houston bankruptcy attorneys, we often hear from small business owners looking for a more affordable and streamlined bankruptcy process. If this sounds like you, Subchapter V bankruptcy might be the solution you're seeking. Let's break down what makes this newer form of bankruptcy unique and how it could benefit your Houston business.

What is Subchapter V Bankruptcy?

Think of Subchapter V as Chapter 11's smaller, more efficient cousin. It's specifically designed for Houston small businesses struggling with debt but wanting to keep their doors open. Unlike traditional Chapter 11 bankruptcy, which can be expensive and complex, Subchapter V offers a faster, more cost-effective path to reorganization.

Who Can File for Subchapter V?

To qualify for Subchapter V in Texas, your business must:

• Have total debts under $3,024,725

• Show that at least 50% of your debts come from business activities

• Be actively operating as a business in Houston or surrounding areas

Benefits for Houston Small Business Owners

1. Lower Costs

Unlike traditional Chapter 11, there's no creditors' committee in Subchapter V cases. For Houston business owners, this means significant cost savings since you won't have to pay for committee professional fees.

2. Faster Process

Time is money in Texas business. Subchapter V requires filing a reorganization plan within 90 days, helping you get back to business sooner rather than later.

3. Keep Your Business

Here's some good news for Houston entrepreneurs: you can retain ownership of your business even if creditors aren't paid in full, as long as your plan meets the "fair and equitable" standard.

4. Simplified Process

You won't need to file a separate disclosure statement or deal with complex voting procedures that are required in traditional Chapter 11 cases.

Key Differences from Traditional Chapter 11

The main differences Houston business owners should know about:

• A trustee is appointed to help facilitate reorganization

• Only the business can propose a reorganization plan

• No creditors' committee

• More flexible requirements for plan approval

Why Houston Businesses Should Consider Subchapter V

If your Houston small business is struggling with debt but has viable operations, Subchapter V could provide the breathing room you need to reorganize and emerge stronger. Whether you're in the energy sector, healthcare, retail, or any other industry that makes Houston's economy thrive, this bankruptcy option might be your path to a fresh start.

Get Expert Help with Your Houston Bankruptcy Case

Navigating any bankruptcy process requires experienced legal guidance. Our Houston bankruptcy attorneys can help determine if Subchapter V is right for your business and guide you through the entire process.

Contact our downtown Houston office today for a confidential consultation about your business's financial future.

This article is for informational purposes only and does not constitute legal advice. For specific advice about your situation, please consult with a qualified bankruptcy attorney.