FAQs: Chapter 11 and Subchapter V
- Melissa A. Youngman
- 13 hours ago
- 4 min read
By Winter Park Estate Plans & ReOrgs Admin
Florida Bankruptcy Attorney – Winter Park, FL
When a business begins exploring restructuring options, owners often have the same questions: How does Chapter 11 work? What is Subchapter V? How long does the process take? Will I lose control of my company?
This FAQs guide answers the most common questions Florida business owners ask when considering Florida business bankruptcy under Chapter 11 or its streamlined counterpart, Subchapter V.
Whether you’re facing creditor pressure, declining revenue, or simply need breathing room to stabilize operations, understanding your options is the first step toward strategic recovery.
1. What is Chapter 11 bankruptcy?
Chapter 11 is a federal bankruptcy restructuring process that allows a business to continue operating while reorganizing its debts. It helps companies:
Stop collection activity,
Renegotiate loans,
Cure or reject leases, and
Develop a plan to repay creditors over time.
For many Florida companies, Chapter 11 is not a sign of failure, it’s a strategic tool for survival and long-term stability.
2. What is Subchapter V?
Subchapter V is a special streamlined version of Chapter 11 created specifically for small and medium businesses. A Subchapter VÂ typically includes:
Faster case timelines,
Lower legal and administrative costs,
A trustee who facilitates communication, and
The ability to confirm a plan even without creditor voting in favor of the plan.
It is one of the most significant improvements to small business bankruptcy law in decades.
3. Who qualifies for Subchapter V?
To file under Subchapter V, the business must have no more than $3,424,000Â in total debt (primarily business debt). Both corporations and individuals operating businesses (sole proprietors) may qualify.
If your business meets the requirements, Subchapter V is almost always more efficient (and cheaper) than traditional Chapter 11.
4. Do I lose control of my business in Chapter 11 or Subchapter V?
No. In nearly all cases, (so long as there is no mismanagement, fraud, or other improper actions by the business owner), the business owner remains in control as a “debtor in possession," during the pendency of the case. This means you keep managing operations, making payroll, and serving customers while the bankruptcy case is pending.
The court supervises the court process, but day-to-day management of the company stays with the owner.
5. What happens to lawsuits, foreclosures, and collection activity after filing?
When you file a Florida business bankruptcy case, the automatic stay takes effect immediately. It stops:
Lawsuits,
Foreclosures,
Repossessions,
Bank account levies, and
Aggressive creditor calls.
This protection gives businesses essential breathing room to reorganize.
6. How long does the process take?
Timelines vary:
Subchapter V: Often 4–8 months
Traditional Chapter 11: Typically 9–24 months
Subchapter V’s simplified procedures and timeline (including the deadline to file a plan within 90 days from filing) allow for much faster plan confirmation.
7. What is a plan of reorganization?
A reorganization plan is a proposal that outlines how the business will repay creditors. It may include:
Reduced or restructured debt,
Lease rejections or a plan to cure arrears over time, and
Payment plans based on future earnings.
In Subchapter V, only the debtor can file a plan, creditors cannot propose competing plans. In a traditional Chapter 11, if the debtor fails to file a plan within the period of exclusivity, creditors may submit competing plans.
8. Will creditors have to approve the plan?
In traditional Chapter 11, impaired creditors vote, and certain voting thresholds must be met to confirm the plan. If the threshold is not met, but the plan complies with confirmation requirements set forth in the Bankruptcy Code, the plan can still be confirmed if the Debtor utilizes the "cram down" procedures, but owner may not be able to retain their equity interests unless senior claims are paid in full. In Subchapter V, there is no absolute priority rule. Plans can be confirmed without a minimum number of creditor votes if statutory requirements are met and owners can keep their equity interests in the business.
This is one of the strongest advantages of Subchapter V for small business owners.
9. What does the Subchapter V trustee do?
The Subchapter V trustee acts as a facilitator, not a manager. Their role is the parties to reach a plan that can be confirmed on a consensual basis. It is not the role of the Subchapter V trustee to take over the business.
10. Can bankruptcy actually save my business?
Absolutely. Chapter 11 and Subchapter V are designed to preserve equity in the business, protect jobs, and give financially distressed companies a structured path to stability. Many Florida businesses emerge stronger, more efficient, and better positioned for the future.
The Bottom Line
If your business is facing financial pressure, declining sales, or unmanageable debt, Chapter 11 or Subchapter V may provide the relief and structure needed to rebuild.
A clear understanding of the process (and early planning) is essential for a successful reorganization.
At Winter Park Estate Plans & ReOrgs, we guide business owners through every step of restructuring under Chapter 11 or Subchapter V, from evaluating eligibility to confirmation and post-confirmation compliance.
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