Subchapter V Trustee Should Not Be A Debtor’s Disbursing Agent

By: Donald L Swanson Question:  Should a Subchapter V trustee be receiving and disbursing the debtor’s payments to creditors? Answer:  No—absent highly unusual circumstances. Rationale Here are the reasons for the negative answer. --First A Subchapter V trustee’s compensation is based on hourly services rendered—not on a percentage of money the trustee handles.  See this linked... 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 →

New Pandemic Law Fails to Extend Subchapter V Eligibility Limit

By: Donald L Swanson So . . . the second, bi-partisan pandemic bill has made its way through both houses of Congress. It has been approved by politicians in both parties. It is signed by the President and is now law.  Here is a link to the text of the bi-partisan law.  It’s called the "Coronavirus... Continue Reading →

Subchapter V: Can A Plan Term Be Less Than 3 Years?

An early end By: Donald L Swanson “The term of a Subchapter V plan can be less than three years, based upon the language of the statute!” --A Bankruptcy Judge's comment at a bankruptcy conference in December 2019 (as I recall it). Upon hearing that comment, I went scrambling to find the statutory language.  And here... Continue Reading →

Subchapter V Trustees: Compensated On Hourly Fee, Not Percentage of Disbursements (In re Tri-State & Subchapter V Handbook)

By: Donald L Swanson Subchapter V trustee compensation is based on an hourly fee. Unlike compensation for a Chapter 7, Chapter 12 or Chapter 13 trustee, a Subchapter V trustee’s compensation has nothing to do with the amount of funds disbursed. That’s the conclusion of a Bankruptcy Court opinion: In re Tri-State Roofing, Case No. 20-40188,... 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 →

Do Creditors Vote on Subchapter V Plans? (In re Desert Lake / In re Pearl Resources)

Voting (photo by Marilyn Swanson) By: Donald L Swanson In Subchapter V of the Bankruptcy Code, the “Post-Petition Disclosure and Solicitation” provisions of § 1125 do not apply without a specific court order (see § 1181(b)). Voting Questions So, a question exists on how the plan voting provisions of § 1126 and Fed.Bankr.R. 3018 might apply... Continue Reading →

Blog at

Up ↑

%d bloggers like this: