Subchapter 5 of Chapter 11 of the U.S. Bankruptcy Code provides profitable small businesses that owe less than $7.5 million to their creditors with a streamlined process for paying down their mounting debt. Put more simply, Subchapter 5 makes reorganization more accessible to small businesses.
Under Subchapter 5, a qualifying business, can force creditors to accept court-approved repayment plans of 3-5 years and allow the business to shed some of their unsecured debt (like most credit card debt, and unlike most debt incurred in connection with real property, automobiles and machinery and equipment) for which no collateral has been offered.
In recent years, Rabinowitz Lubetkin & Tully has handled a growing number of Subchapter 5 matters on the side of the debtor. The following are but a few examples:
- Representing JAM Media, a minority entrepreneur that owned radio stations in vacation spots in Iowa and North Carolina.
- Representing Wildflower Digital, an internet marketing company with many millions of dollars of debt.
- Representing New Jersey Vision, an ophthalmology practice in Bloomfield, New Jersey that was hurt by the COVID crisis.
- Representing Masahiko and Yasuko Negita, a Japanese couple that owned restaurants against which a $1.8 million judgment for violation of federal and New York labor laws had been imposed.
- Serving as conflict counsel for a Chicago based law firm on behalf of the debtor, Council for Aid to Education, Inc., a non-profit, which had an expensive lease.