Chapter 5 Bankruptcy

On February 19, 2020, Congress enacted the Small Business Reorganization Act of 2019 (“SBRA”), also known as Subchapter 5, in order to help small businesses through the bankruptcy restructuring process by providing them with a faster and less expensive option for reorganizing under Chapter 11…read more.  VPS’s experienced bankruptcy team assists law firms with preparing and managing bankruptcy filings including Subchapter 5 proceedings.

Under the SBRA, the plan process is much more streamlined and designed to keep cases moving quickly, requiring a debtor to file its plan of reorganization within 90 days after entering bankruptcy.  This can strain law firm resources.  VPS helps firms and debtors stay on pace with this more rapid bankruptcy process.

Subchapter 5 Timeline:

  • Not later than 60 days after the bankruptcy filing, the bankruptcy court will hold a status conference “to further the expeditious and economical resolution of a case under this subchapter.”
  • Not later than 14 days before the status conference, the debtor’s bankruptcy counsel is required to file a report that details the steps the company and its advisors have taken to attain a consensual plan of reorganization.
  • Unless the debtor requests an extension related to circumstances outside of its control, the chapter 11 plan of reorganization must be filed not later than 90 days after the bankruptcy case is filed.
  • Once the debtor completes all payments according to the plan, the reorganized debtor will receive a discharge from all of its pre-confirmation debts.

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