Small Business Bankruptcy Lawyer in Florida

Chapter 11, Subchapter V of the U.S. Bankruptcy Code provides a special process through which qualifying small businesses may restructure, reorganize, and reduce debt over time. The process allows the owner to remain in possession of the business and continue operations as usual while benefiting from the “wall of protection” provided by the Chapter 11 small business proceeding.

Based in Boca Raton, Florida, and operating throughout the state, small business bankruptcy lawyer Aaron Wernick counsels and represents clients in the Subchapter V process.

Proven Success in Chapter 11 Bankruptcy

Like standard Chapter 11 bankruptcy, small business bankruptcy under Subchapter V is a complex and time-consuming process. Navigating the complicated laws and detailed process requires representation by a highly skilled small business bankruptcy lawyer. Aaron Wernick has over 15 years of complex bankruptcy experience, including many Subchapter V cases. He is certified in business and consumer bankruptcy law from the American Board of Certification, and is recognized by Chambers and Partners for bankruptcy and restructuring in the Florida Spotlight Guide for 2024.

Aaron has built an exceptional record of success in Chapter 11 cases, securing reorganization plan confirmation in approximately 95% of his cases. This accomplishment is all the more remarkable when contrasted with the generally reported nationwide rate of about 15 to 20 percent for Chapter 11 confirmation.

Aaron excels in Subchapter V small business representation due to his extensive experience and finely honed business bankruptcy skills and knowledge. His keen negotiating and problem-solving skills and his unwavering dedication to protecting his client’s interests enable Aaron to guide difficult, challenging cases to the finish line by advocating for the client, while strategically and efficiently pursuing solutions that lead to resolution of disagreements.

Throughout a Chapter 11 proceeding, Aaron and the whole team at Wernick Law provide ongoing, personalized attention to the client. Every concern is fully addressed. Every question gets a thorough response. The client is always kept informed about the status and progress in the case. Clients especially appreciate Aaron’s ability to explain complicated information in a way that is easily understood.

Small Business Bankruptcy Under Chapter 11, Subchapter V

To be eligible for Chapter 11, Subchapter V bankruptcy, a small business must have less than $7.5 million in total secured and unsecured debt, with at least half of the total amount coming from business activities. Businesses that receive nearly all income from a single real estate property are excluded.

The Chapter 11 Subchapter V process is more streamlined and less costly than the standard Chapter 11 procedure, which is described in detail on the business bankruptcy page. Significant differences in Subchapter V include the following aspects:

Filing a Subchapter V Petition

Like standard Chapter 11, a debtor files a Subchapter V petition in the bankruptcy court for the location of their principal place of business. Financial documents must be included with the petition, but the detailed financial disclosure statement that accompanies a standard Chapter 11 petition is not required. Other less cumbersome financial information must be filed with the Subchapter V petition.

As in the standard process, a small business filing for Subchapter V becomes a debtor in possession, retaining control of the business and its assets during the Chapter 11 proceeding. The business continues operating during the process, benefiting from a temporary wall of protection and an automatic stay of collections, as in a standard Chapter 11 case.

The process moves fairly quickly in Subchapter V. The court holds a status conference within 60 days of filing, and the debtor is required to submit a plan for reorganization within 90 days of petition filing.

Appointment of Trustee

One of the primary differences from standard Chapter 11 is that the court appoints a trustee in a Subchapter V case, while there usually is not a trustee in the standard process. The Subchapter V trustee oversees the process and has a broad range of functions, including facilitating development of the reorganization plan. The trustee does not control the debtor’s finances, but does have authority to review and monitor the debtor’s financial condition and business operations.

With the trustee assuming the oversight role, the Subchapter V process dispenses with the creditors’ committee requirement that applies in standard Chapter 11 cases, although the court can appoint a creditors’ committee for cause. Using a trustee in lieu of a creditors’ committee makes the process considerably more efficient and is one of the reasons that the costs of Subchapter V are lower than standard Chapter 11.

Reorganization Plan

Since Subchapter V does not involve a creditors’ committee, there is not a requirement for a creditors’ approval vote on the reorganization plan. However, the plan must meet specific requirements for the court to grant approval.

The court must find that creditors receive as much under the plan as they would in a Chapter 7 liquidation proceeding and that the plan is fair and equitable. In addition, the bankruptcy court approves the plan only after determining that the debtor can — or is reasonably likely to be able to — keep up with the payments under the plan.

A Subchapter V plan typically provides a three- to five-year period for repayment. The debtor receives a discharge only if all payments are made. During the repayment period, the debtor devotes all of their disposable income to making plan payments, except for resources necessary to continue business operations and to support the debtor and their dependents.

Additional Rules for Chapter 11, Subchapter V

The Subchapter V process includes further provisions that may modify the process from standard Chapter 11. All of the changes are intended to make the process more efficient and less costly, while still protecting creditors’ rights.

The many nuances of Subchapter V and the significant differences from standard Chapter 11 make it essential for a small business to discuss bankruptcy options with a knowledgeable attorney before deciding how to proceed. Aaron Wernick has the experience, knowledge, and skill to guide clients through the small business bankruptcy process. Wernick law represents companies for Subchapter V bankruptcy that are cash-flow positive with at least $3 million in revenue.

Legal Matters Related to Chapter 11

A Chapter 11 individual bankruptcy may arise from many different circumstances, some of which involve other legal proceedings. In his Chapter 11 practice, Aaron Wernick handles many related legal matters as part of a reorganization bankruptcy case, such as:

• Department of Justice (DOJ) issues
• Federal Trade Commission (FTC) issues
• Internal Revenue Service (IRS) controversies, including income tax and payroll / withholding tax matters
• Medicare billing claims
• Florida Department of Revenue actions
• Federal and Florida Fair Debt Collection issues
• Disputes involving lenders, landlords, suppliers, and shareholders
• Asset protection issues

Aaron also works with his clients post-bankruptcy in the area of asset protection, so that the value preserved or enhanced through the restructuring is protected going forward.