Removing Subchapter V Debtor From Possession And Replacing With Subchapter V Trustee (In re Young)

Removed (photo by Marilyn Swanson) By: Donald L Swanson When a Subchapter V debtor is removed from possession, the Subchapter V trustee steps into the possession role.  That’s according to statute. Statutes Here are the statutory provisions (emphasis added): 11 U.S.C. § 1182(2) is titled, “Debtor in Possession” and says, “The term ‘debtor in possession’ means... Continue Reading →

Subchapter V’s $7.5 Million Debt Limit Is Extended (But Only For A Year!!)

COVID-19 Bankruptcy Relief Extension Act of 2021 By: Donald L Swanson It's finally happened -- on bi-partisan and nearly-unanimous votes. The $7.5 million debt limit for Subchapter V eligibility, set to expire on March 27, 2021, is extended. Yet, it took a March 2021 fire drill to do so (see this webpage), which fire drill concluded... Continue Reading →

When Does A Subchapter V Discharge Happen? (In re Satellite Restaurants)

Timing (photo by Marilyn Swanson) By Donald L. Swanson Here are opposing Subchapter V discharge rules—based on whether the plan is confirmed consensually or non-consensually: Consensual Confirmation.  “If a plan is consensual and confirmed under Section 1191(a), the debtor receives a discharge under Section 1141(d)”; butNon-Consensual Confirmation.  If a plan is non-consensual and confirmed under Section... Continue Reading →

Generating a Positive Cash Flow in Reorganization: The Central Task of a Family Business

By: Donald L Swanson A family business in Chapter 11 (whether in Subchapter V or a regular Chapter 11) has one task that stands above all others in importance. It’s this: The business must generate a positive cash flow. The Lawyer’s Impossible Task All the favorable bankruptcy rules that exist, and all the favorable bankruptcy court... Continue Reading →

A Subchapter V Plan Needs To Be A First Day Filing (In re Online King)

A first day? (photo by Marilyn Swanson) By: Donald L Swanson Here is a Hard-Knocks Rule (i.e., a lesson I’ve learned the hard way): A plan of reorganization needs to be a first-day filing—or as close to that as possible. This lesson first imposed itself upon me three decades ago.  I’m representing a Chapter 11 debtor,... Continue Reading →

Quiz Question On Debt Limits For Bankruptcy Eligibility

Not eligible for roaming the prairie (photo by Marilyn Swanson) By: Donald L Swanson QUIZ – Multiple Choice Question Question: Where is this bankruptcy eligibility language found: “aggregate noncontingent liquidated secured and unsecured debts as of the date of the filing of the petition or the date of the order for relief in an amount not... Continue Reading →

“Small Business Debtor” And “Subchapter V” Co-Exist As Separate Systems In Chapter 11

Co-existing, side-by-side (photo by Marilyn Swanson) By: Donald L Swanson A little-known effect of the enactment of Subchapter V is this: Prior “small business debtor” rules now co-exist, side-by-side, with (and separately from) Subchapter V rules in Chapter 11; andWe have two separate-but-similar systems for small business debtors. A Chronology Consider this chronology of changes that... Continue Reading →

What Are Owners Of A Closely-Held Business To Do, When Subchapter V Is Not Available?

By: Donald L Swanson It happens.  There are businesses in financial stress who, for a variety of reasons, can’t qualify for Subchapter V.  Owners want to save the business, but Subchapter V is not available. Reasons why Subchapter V might be unavailable include: Debtor has more than $7.5 million of qualifying debt and can’t get enough... Continue Reading →

Subchapter V Eligibility: Congress Needs To Permanently Extend The $7.5 Million Limit — Now!

A permanent extender? (photo by Marilyn Swanson) By: Donald L. Swanson The Small Business Reorganization Act of 2019 (aka “Subchapter V”) has been in effect since February 19, 2020.  And here’s something we’ve learned since then: Subchapter V meets a definite need in our society for helping small businesses and owners in financial stress. I’ve seen... Continue Reading →

Subchapter V: What Does “Fair and Equitable” Mean For Plan Confirmation? (In re Pearl & In re Ellingsworth)

The path to confirmation? (Photo by Marilyn Swanson) By: Donald L Swanson 11 U.S.C. § 1191 is Subchapter V’s plan confirmation statute.  One confirmation essential, from § 1191(b), is that a Subchapter V plan must be “fair and equitable” to each impaired class that does not accept the plan. This article summarizes two bankruptcy court opinions... Continue Reading →

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