Small business bankruptcy · Beverly Hills
Subchapter V Bankruptcy in Beverly Hills for Small Businesses That Want to Keep Going
Chapter 11 / Subchapter V small business bankruptcy in Beverly Hills lets a small business cut its debt down to size and keep operating, with the owner still in control. If lenders, landlords or the IRS are pressing your business, call (310) 362-9071 for a free consultation.
- A faster, lower-cost form of Chapter 11
- Owners can usually keep their ownership
- Only the business proposes a plan
- Plan payments over 3 to 5 years
- Free consultation in person or by video
Is Subchapter V right for your business?
Subchapter V was added to Chapter 11 so small businesses could reorganize without the cost of a traditional case. It fits companies that are still viable but are carrying more debt than their cash flow can handle.
- The business makes money before debt payments, but not enough to cover them
- A landlord, equipment lender or merchant cash advance company is threatening to shut you down
- Tax debt has grown with penalties and interest
- Total debts are within the Subchapter V limit set by law
- You want to keep the business, not close it
Individuals whose debts come mostly from a business they run can also qualify. If the business cannot be saved, read about business bankruptcy options to close it in an orderly way.
How we handle a Subchapter V case, step by step
- Free consultation. We review recent financial statements, tax returns, cash flow, leases, loans and any personal guarantees.
- Filing and first-day needs. We file the case and deal with urgent items, such as using cash that a lender claims, so the business can keep operating.
- Subchapter V trustee. A trustee is appointed to help the parties reach a plan. The business stays in charge of its daily operations.
- Plan within 90 days. The business files its plan, usually within 90 days of filing. Only the business can propose a plan, which keeps you in control of the terms.
- Confirmation. The court can confirm a plan that pays creditors the business's projected disposable income for 3 to 5 years, even if some creditors vote no.
- Plan payments. The business makes plan payments and keeps operating. The owner usually keeps the company.
Cost and timeline
Subchapter V costs much less than a traditional Chapter 11, but it is more involved than a consumer case. You get our fee in writing at the free consultation after we review the business. Court filing fees and a Subchapter V trustee's fees also apply.
The plan is usually filed within 90 days, and many cases reach confirmation within a few months after that. Plan payments then run 3 to 5 years.
Subchapter V in the Central District of California
Business cases from Beverly Hills and most of Los Angeles County are filed in the Los Angeles Division of the U.S. Bankruptcy Court, Central District of California, at 255 East Temple Street. The court holds an early status conference in Subchapter V cases, and the business must file regular operating reports. We prepare those reports with you so the case stays on track.
Many Los Angeles small businesses carry merchant cash advances, commercial leases and SBA loans. Each is treated differently in a plan, and we look at how each one affects what the business can pay.
Mistakes that hurt small business cases
- Waiting until the account is frozen. Filing before a levy or lockout gives you more options.
- Mixing business and personal money. Clean books make the plan easier to confirm.
- Falling behind on payroll taxes. Withheld payroll taxes can become the owner's personal debt.
- Forgetting personal guarantees. The business case does not protect the owner who signed a guarantee. Plan for both.
Related services
If the business should close instead of reorganize, read about business bankruptcy in Beverly Hills. If a lender or the trustee sues you inside a case, see adversary proceeding defense.
Subchapter V questions
Will I lose ownership of my business in Subchapter V?
No, owners usually keep their business in Subchapter V. Unlike traditional Chapter 11, the plan can be confirmed without requiring creditors to be paid in full before owners keep their equity, as long as the business commits its projected disposable income to the plan.
How is Subchapter V different from regular Chapter 11?
Subchapter V is faster and less expensive than regular Chapter 11. There is usually no creditors' committee, only the business can propose a plan, and the plan can be confirmed over creditor objections if it meets the legal tests.
Can a sole proprietor use Subchapter V?
Yes, a sole proprietor can use Subchapter V if at least half of their debts come from business activity and total debts are within the legal limit. In some cases, Chapter 13 is a simpler fit, and we compare both.
Does Subchapter V stop a merchant cash advance company from collecting?
Yes, filing Subchapter V stops merchant cash advance companies from collecting while the case is open, including debits from your bank account. How the advance is treated in your plan depends on its terms.
Free consultation
Find out if your business can reorganize
Call (310) 362-9071 or send the form. Have your last profit and loss statement and a list of business debts ready.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.