Small business owners in Florida face growing pressure from rising interest rates, supply chain disruptions, and customer defaults. When these financial challenges become unsustainable, bankruptcy may provide a path to reorganization and recovery. Subchapter V of Chapter 11 bankruptcy was introduced to make this process more efficient and affordable for small businesses that want to stay open.
Subchapter V is specifically designed for small businesses with debt under a certain threshold, providing streamlined procedures that avoid the high costs and complications associated with traditional Chapter 11. At CAVA Law, we help small business owners in Coral Gables, Miami, and across Florida understand whether this reorganization option is the right solution. If your company is facing creditor pressure, payroll issues, or looming defaults, it is worth evaluating Subchapter V with the help of a bankruptcy attorney.
To qualify under Subchapter V, a business must meet specific criteria. As of 2024, the debt limit for eligibility is $7.5 million, and at least 50 percent of that debt must be tied to commercial business activity.
The business may be structured as a sole proprietorship, a partnership, an LLC, or a corporation. Unlike standard Chapter 11, Subchapter V does not require formation of a creditors’ committee, and it permits the owner to retain control of the company throughout the case.
Small businesses in Florida that are experiencing short-term losses, cash flow disruptions, or creditor lawsuits may benefit from this more flexible approach. Working with a bankruptcy lawyer in Florida is critical in determining whether you meet the criteria and how to structure your case to preserve your operations.
Subchapter V alleviates many of the procedural burdens associated with Chapter 11, which can be too costly or time-consuming for small business owners. One of the key benefits is that it allows owners to maintain control without the need for a disclosure statement or competing plans from creditors.
There is also no requirement for approval from an impaired class of creditors. Instead, the court appoints a Subchapter V trustee whose role is to assist in the process, not take control of the case. The debtor can spread debt payments over three to five years and may even be able to reduce secured debts to the value of the collateral.
These features make Subchapter V a more viable and business-friendly option for reorganization. A qualified bankruptcy attorney in Florida can help you build a plan that focuses on long-term survival and avoids unnecessary litigation with creditors.
Subchapter V cases move faster than standard Chapter 11 filings. After the petition is filed, the court schedules a status conference within 60 days. The debtor must file a reorganization plan within 90 days unless an extension is granted.
Working with a Subchapter V bankruptcy attorney ensures your plan is realistic and complies with legal requirements. The plan must show how the debtor intends to repay creditors over the proposed term using projected disposable income.
Unlike Chapter 13 for individuals, Subchapter V does not require the liquidation of non-exempt assets. This allows businesses to maintain their operating equipment, inventory, and other essential tools necessary for their recovery.
Subchapter V also permits the use of projected income, allowing future revenue to be used to fund the plan rather than relying solely on existing resources. This forward-looking structure is beneficial for seasonal or recovering businesses in the Coral Gables and Miami areas.
While Subchapter V is intended to simplify the reorganization process, there are still legal pitfalls that can cause delays or dismissal. Incomplete financial disclosures, unrealistic projections, or failure to make required payments can all lead to problems during the plan confirmation stage.
Additionally, business owners sometimes wait too long to seek help, making it harder to regain control once the company is in steep decline. Early consultation with a bankruptcy attorney can help avoid these outcomes.
Proper planning, complete documentation, and a realistic approach to creditor negotiations are essential to a successful filing. At CAVA Law, we guide small business clients through every phase of the process, ensuring compliance and helping them protect their core operations.
Since its creation in 2020 under the Small Business Reorganization Act, Subchapter V has helped thousands of businesses nationwide. Industries ranging from construction and food services to retail and logistics have used this streamlined process to cut unsecured debt, restructure leases, and reduce burdensome vendor contracts.
In Florida, local businesses have used Subchapter V to preserve jobs, renegotiate terms with suppliers, and stay open while resolving disputes in court. Business owners who have historically avoided Chapter 11 due to stigma or cost now have an alternative that is both efficient and business-focused.
The best time to explore this option is before lawsuits or judgments restrict your ability to make decisions. Speak with a bankruptcy attorney in Florida as early as possible to assess your options.
At CAVA Law, we offer practical, forward-thinking legal guidance centered on long-term stability. We begin by reviewing your business’s financial picture and identifying the most viable path for debt relief.
If Subchapter V is appropriate, we help prepare the necessary filings, communicate with the court and creditors, and ensure that your repayment plan is positioned for approval. You retain control of your business throughout the case, and we work closely with you to protect assets, contracts, and personnel.
To learn more about how we support businesses across Florida, visit our team page for more about our experience in commercial bankruptcy matters.
Small businesses are the backbone of Florida’s economy, and Subchapter V provides a powerful tool to keep them alive during periods of financial stress. If your company is struggling to meet obligations, facing collections, or anticipating future insolvency, this reorganization path may be worth pursuing.
CAVA Law helps business owners across Coral Gables, Miami, and beyond use Subchapter V to protect what they’ve built and secure the future of their operations. We offer clear legal strategies, responsive support, and a deep understanding of how small businesses operate.
If you’re ready to restructure your debts and continue moving forward, contact us today to speak with our team.
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If you’re facing bankruptcy, debt litigation, or real estate issues in South Florida, don’t hesitate to contact CAVA Law for personalized and compassionate legal representation.
