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Bankruptcy Litigation

The Benefits of Subchapter V — But Are You Guaranteed to Stay?

Although Subchapter V may create a clearer path to confirmation, debtors must be aware of, and (absent an extension by the court) comply with, the more stringent timing requirements, such as the requirement of filing a plan within 90 days after filing bankruptcy.

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On Aug. 23, 2019, Congress enacted the Small Business Reorganization Act of 2019 (SBRA), which became effective on Feb. 19, 2020, creating Subchapter V of Chapter 11 of the Bankruptcy Code (11 U.S.C. §§1181-1195 Subchapter V). Subchapter V made several substantive and procedural changes to the Code, which were intended to streamline the Chapter 11 process for small business debtors by eliminating certain requirements that made it more difficult and expensive for small businesses to reorganize. For those who qualify, Subchapter V is now an advantageous way to reorganize a business.

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