Subchapter 5 Bankruptcy Attorney in Columbus, Ohio
Are you a business owner burdened with debt and considering filing for bankruptcy, but your options are limited?
Chapter 11 bankruptcy protection can be a source of relief for companies experiencing severe financial troubles and having accumulated significant debt. However, several financially struggling small businesses cannot utilize Chapter 11 in the same way that financially-challenged large companies could because the process is too expensive, too time-consuming, or simply not practical.
Small firms who wish to file for bankruptcy now have access to a new alternative that is more flexible than previous ones. If you are interested to find out how you can achieve financial relief for your small business, get in touch with our qualified subchapter 5 bankruptcy attorney in Columbus, OH, immediately!
Why do I need a Subchapter 5 Bankruptcy Lawyer in Ohio?
You are not necessarily required to hire an attorney to file for a bankruptcy petition. But with the complexity of the bankruptcy process and the frequently high stakes involved, it is in your best interest to seek advice from an experienced subchapter 5 bankruptcy attorney in Columbus, OH.
Sheppard Law Offices have successfully handled all types of bankruptcy cases and know how to place you on the best path to achieving financial relief. We know bankruptcy law and how it can be applied to your case!
We can guide and assist you with the following:
- Account for all of your income and liabilities
- Create an effective repayment plan
- File all your paperwork within the given timeframe
- Negotiate with your creditors on your behalf
- Represent you in all legal bankruptcy proceedings
We can assist you and your company in getting back on your feet and receiving a fresh start. Contact us immediately and discover how our capable subchapter 5 bankruptcy attorney in Columbus can be your best help.
What is Subchapter 5 Bankruptcy?
Subchapter 5 bankruptcy is a type of bankruptcy that falls under Chapter 11 of the United States Bankruptcy Code. Chapter 11 bankruptcy is frequently referred to as “reorganization” bankruptcy. In 2019, subchapter 5 was created to the code to increase small businesses’ access to reorganization bankruptcy.
Under Subchapter 5 bankruptcy, small business owners can reorganize debt and set a plan to repay the remaining debt without ceasing operations. One of the most frequently mentioned characteristics of a Subchapter 5 bankruptcy is the possibility of the business owner eliminating unsecured debt through the plan.
Suppose your business is struggling and your last option is to file for Chapter 11 bankruptcy under subchapter 5. In that case, it is in your best interest to seek legal assistance from a credible subchapter 5 bankruptcy attorney in Columbus, OH.
What is the Difference Between Subchapter 5 and Regular Chapter 11 Bankruptcy?
The most significant difference between a standard Chapter 11 bankruptcy and a Subchapter 5 bankruptcy is complexity and control.
A Subchapter 5 business bankruptcy is less expensive and more streamlined than a typical Chapter 11 bankruptcy. Furthermore, a Subchapter 5 bankruptcy places the business owners in the helm, as they keep their equity, retain control, and are the only party who can submit a debt restructuring plan.
How Does Subchapter 5 Bankruptcy Work?
Before you consider filing for subchapter 5 bankruptcy, it is strongly recommended to consult with a subchapter 5 bankruptcy attorney in Ohio who has the knowledge and experience to guide you.
Subchapter 5 bankruptcy is appropriate for a small business that meets the debt cap and wants to keep operating. An experienced bankruptcy attorney will work with you to thoroughly evaluate the information and documents on your company’s revenue, assets, debts, and expenses. Federal tax returns, balance statements, and other related financial documents establishing debt owed and current business operations are typical examples of these documents.
As soon as the petition is filed, an “automatic stay” is imposed, and your creditors are forced to suspend all collection efforts, including calls, litigation, and bank levies. This also begins the 90-day period, during which you must submit a reorganization plan to the United States bankruptcy court for approval.
A plan of reorganization outlines the following for the court and creditors:
- How you intend to pay certain creditors by determining your net monthly revenue;
- How much you intend to pay back to all creditors – secured creditors are entitled to at least the value of the collateral, while unsecured creditors are not required to be repaid in total, and;
- The terms under which you will pay back these creditors – plans can last between three and five years.
The repayment plan and bankruptcy court approval are the most crucial elements of a successful chapter 5 bankruptcy. Therefore, pre-petition planning with your Ohio bankruptcy attorney for your subchapter 5 plan of reorganization is essential to avoid unnecessary delays and costs. This is very important, considering the repayment plan must be filed within 90 days.
What Are the Benefits of Subchapter 5 Bankruptcy?
The following advantages are available to you if you declare bankruptcy for your small business under Subchapter 5:
- Continued business operations. As long as you adhere to the payment plan, you will retain ownership of your company and be able to continue operating it. While the repayment plan is in effect, you must also pay your unsecured creditors all of your disposable income.
- Faster bankruptcy process. Subchapter 5 bankruptcy is intended to provide a more accessible option for smaller enterprises. With fewer reporting obligations and less potential for creditors to disrupt the process as a whole, a Subchapter 5 corporate bankruptcy is significantly quicker and, thus, less expensive than a conventional Chapter 11 bankruptcy.
- Creditor approval is not required. Permission from your creditors is unnecessary for the bankruptcy court to approve your reorganization plan if the court determines that the plan is reasonable and just. A standard Chapter 11 bankruptcy repayment plan requires creditor approval.
- Only your business or company can file a repayment plan. In some Chapter 11 bankruptcy petitions, creditors have the opportunity to propose a plan on your behalf. However, only your company can submit a repayment plan under Subchapter 5.
- No disclosures are needed. In ordinary Chapter 11 bankruptcy cases, you must submit a comprehensive disclosure statement to the bankruptcy court. The statement offers a summary of your company and assesses whether or not you can pay back your debtors. In Subchapter 5 cases, no declaration is required.
- Appointment of a special trustee. You will be allowed to continue running your firm during the bankruptcy process, but a trustee will be appointed to oversee its daily activities. The bankruptcy court will consider the trustee’s suggestions while deciding whether to approve the restructuring plan.
- Your company expenses will be paid in installments. When filing a Chapter 11 bankruptcy petition, you must pay all of the administrative costs on the same day the repayment plan takes effect. Subchapter 5 allows you to spread out the payments for the expenses throughout the plan.
If you want to take advantage of the benefits of Subchapter 5 bankruptcy, reach out to a seasoned Columbus subchapter 5 bankruptcy attorney immediately to get the process started.
Who Are Eligible for Subchapter 5 Bankruptcy?
To be eligible to file for bankruptcy under Subchapter 5, a company must meet two requirements:
- A company must be actively engaged in business activities, and its total debt must not exceed $2.75 million. Insider debts cannot be included.
- The revenue generated by the company’s operations must constitute at least half of the total debt. Businesses whose primary activity is the ownership and operation of a single property are ineligible.
To ensure you qualify, an experienced subchapter 5 bankruptcy lawyer in Ohio can help you assess your company situation and if you meet the requirements.
Creditors Still Enjoy Some Protections under Subchapter 5 Bankruptcy
Subchapter 5 makes it easier for small businesses to file for reorganization bankruptcy, although Chapter 11 still provides creditors with the following advantages:
- Creditors are entitled to at least the same amount from the reorganization they would have received if you had filed for bankruptcy under Chapter 7.
- There is a possibility that secured creditors will maintain their rights to the property that you have pledged as security.
- Protecting their collateral and applying for relief from the automatic stay are options open to secured creditors.
Creditors can use these powers to pressure you into providing preferential treatment for them within the framework of your restructuring plan. A strategic and skilled Ohio subchapter 5 bankruptcy attorney can assist you in exploring your options and pursuing your best interest. Call us today to discuss your bankruptcy matters!
Call our Experienced Subchapter 5 Bankruptcy Attorney in Columbus, OH, Now!
Filing for Subchapter V of Chapter 11 bankruptcy is a big decision that can affect your company and your finances for years to come. And although it is intended to be simpler than traditional Chapter 11, the process is still complex.
Sheppard Law Offices understands the Bankruptcy Code and its implications. We are confident in working towards achieving financial relief for your company. Our Columbus law firm also offers family law, estate planning, and tax services. Let us help you address all your concerns!
Contact Sheppard Law Offices and set up a free consultation to determine the best course of action to help get out of your precarious financial situation!