Hi I’m Michael Chekian, your friendly bankruptcy lawyer, and today I want to talk about the new Chapter 11 Subchapter 5, or as I call it, mini-Chapter 11.
Traditional Chapter 11’s work well for large corporations who need to reorganize and reemerge as leaner, less debt heavy companies. It is an efficient way for these big companies to stay in business and get the financing they need because they are less of a credit risk when they carry a smaller debt load and can take the time to develop a plan to make them more profitable and even attract new stockholders who are excited to invest in this new potential money making company.
The problem with Chapter 11 for small companies and individuals is the attorney fees and the lengthy plan confirmation procedure. Chapter 5 provides lower debt companies and individuals (currently around $7 million under special laws adopted in response to the pandemic) to submit a plan within 3 months of filing the case and get a plan confirmed without having to submit a lengthy and expensive disclosure statement, without having to pay U.S. Trustee’s fees and being able to confirm a plan despite creditors disagreeing with it.
For more information, please click on the below link for an informative and free 15 minute consultation with me.