Houston, TX Chapter 5 Bankruptcy Lawyer
Strategic Advice and Representation for Chapter 11, Subchapter V Bankruptcy Filings in Houston, TX
Chapter 5 bankruptcy (Chapter 11, Subchapter V) is designed to provide small businesses with debt relief as they continue working towards profitability. Chapter 5 bankruptcy is actually subchapter V of Chapter 11 bankruptcy that is intended to make reorganization bankruptcy possible and simpler for smaller companies. If you own a small business and have both significant debt and a strong plan for keeping the business open, Chapter 5 bankruptcy might be right for you. This type of bankruptcy does not involve liquidating your business's assets. You can keep the property you need to keep running your company, although a good portion of your profits are likely to go toward repaying your debts.
If you are considering filing for bankruptcy under Chapter 11, Subchapter V to save your struggling small business, having excellent legal representation is essential. Since the court will need to approve your repayment and reorganization plan, you will want an experienced law firm like The Fealy Law Firm, PC to advocate on your behalf. Attorney Vicky Fealy will work with you, your creditors, and the court to establish a manageable plan.
What Is the Difference Between Chapter 11 and Chapter 5 Bankruptcy?
Chapter 11 bankruptcy tends to work better for large corporations. Subchapter V bankruptcy is slightly less complex, and it is designed to be accessible for small business owners. In Chapter 11 bankruptcy, the creditors are able to propose the repayment plan that they want. In Chapter 11, Subchapter V bankruptcy, only the debtor is able to offer repayment terms. This gives small business owners more control during the process.
An attorney can help you create a repayment plan that will work for you. Attorney Fealy can do the math and suggest repayment plan options that she has determined your business can reliably adhere to.
While Chapter 11 bankruptcy may be prohibitively expensive for small business owners, Subchapter V bankruptcy is financially accessible to most companies that can stay open and become profitable.
Another major advantage of choosing Chapter 5 over Chapter 11 is that in Subchapter V, your reorganization plan needs to be approved only by the court—not your creditors. In a standard Chapter 11 filing, you would need your creditors to agree to the terms. The court is likely to accept any repayment and reorganization plan it deems fair and equitable.
How Chapter 5 Bankruptcy Can Save Your Small Business
Chapter 11, Subchapter V bankruptcy can allow you to keep your business open, unlike Chapter 7 bankruptcy, which would force you to sell the business or liquidate its assets to pay off debts. You can take this as an opportunity to create a better business plan and restructure your company so that it is more likely to succeed. Part of completing a Subchapter V bankruptcy is showing the court—and the creditors—that your company does have the capacity to start turning a profit that will allow it to make payments over time.
Qualifying for Chapter 11, Subchapter V Bankruptcy
Your business must meet three basic requirements to qualify for Subchapter V rather than a Chapter 11 filing. First, at least half of your debt must stem from business activity. An attorney can help you to determine what portion of your debt can be considered business-activity-related. You must also continue pursuing business activities likely to generate profit. Finally, your non-contingent debt must not exceed $7,500,000 (the current debt limit), a requirement easily met by most small companies.
Contact a Sugar Land, TX Small Business Bankruptcy Attorney
The Fealy Law Firm, PC is skilled at helping small companies recover from debt. Experienced Harris County lawyer Vicky Fealy will work to save your business and help you get out of debt. Contact us at 713-526-5220 for a complimentary consultation. Our firm represents clients in bankruptcy cases in Houston and Southeastern Texas, including League City, Prairie View, Pearland, Sugar Land, Conroe, Pasadena, The Woodlands, Cypress, Spring, and Galveston.
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