Los Angeles Subchapter V Bankruptcy Attorney

California attorney helps small businesses use a streamlined Chapter 11 process

Traditional Chapter 11 bankruptcy filings can be complicated and expensive for small businesses. Eligible businesses can opt for the less cumbersome and costly Subchapter V bankruptcy, which was added through the Small Business Reorganization Act of 2019. At the Law Offices of Michael Jay Berger, we guide business clients through this streamlined process. Our Beverly Hills-based firm assists clients throughout Southern California in effectively navigating bankruptcy. 

Eligibility requirements for Subchapter V bankruptcy in California 

Sole proprietorships, partnerships and corporations are eligible to file for Subchapter V bankruptcy if they meet the following requirements:

• Total debt must not be more than $3,424,000 (as of April 1, 2025).
• At least 50 percent of the debt must be related to business and commercial activities.
• The company must be privately owned (not publicly traded). 
• The company must be “engaged in commercial or business activities,” which means that it is still doing anything connected to its business, even if revenue has stopped.

If you are considering filing Chapter 11 in California, we can help you determine if you qualify for the simpler and less expensive Subchapter V bankruptcy process. 

Key advantages of Subchapter V over traditional Chapter 11

A Subchapter V is much faster and far less expensive than a traditional Chapter 11, largely because of these attributes: 

• The debtor remains in control of the business.
• The debtor can often retain equity even without paying creditors in full.
• Only the debtor can file a reorganization plan.
• No creditor approval is required for plan confirmation.
• Fewer procedural requirements make the process less complex.
• Debtors can stretch repayments and fees over time and modify many secured debts.

The basic requirements of Subchapter V are that the reorganization plan be fair and feasible and that it commit the business’s disposable income for three to five years.

The role of the Subchapter V trustee in Los Angeles cases

The United States Trustee appoints the Subchapter V trustee for each case. The trustee’s role is to work with the debtor and creditors to facilitate development of the plan of reorganization. Unlike traditional Chapter 11 cases, the trustee does not control the debtor’s assets, but they monitor the debtor’s compliance with the reorganization plan and file reports with the bankruptcy court. 

Developing and confirming a Subchapter V repayment plan 

Once you file your petition for Subchapter V bankruptcy, you have 90 days to submit your repayment and reorganization plan to the court for approval. Approval of the reorganization plan by creditors is not required. Rather, the court will look at the plan to ensure it is fair and equitable to creditors. This requirement is satisfied if all of the debtor’s projected disposable income is used to fund the plan payments, which can be made over a three- or five-year period.

Treatment of secured and unsecured creditors under Subchapter V

Acceptable restructuring of debt is key to keeping a business open during Chapter 11 bankruptcy. Secured creditors are prioritized over unsecured creditors. Subchapter V allows for more flexibility in restructuring secured loans and modifying payment terms. We can help you develop a plan that beneficially addresses trade debts, leases and executory contracts and satisfies creditors. 

Contact an experienced California bankruptcy firm for help with Subchapter V

The Law Offices of Michael Jay Berger in Beverly Hills represents clients throughout Southern California in Chapter 11 Subchapter V bankruptcy proceedings. Call us at 310-271-6223 or contact us online to schedule a consultation.