Liquidating Debtors May Qualify for Subchapter 5

Faegre Drinker co-chair Andrew Kassner and counsel Joseph Argentina coauthored an article for The Legal Intelligencer, titled “Liquidating Debtors May Qualify for Subchapter 5.”

Kassner and Argentina discuss the Small Business Reorganization Act of 2019 (SBRA), which created a new “Subchapter 5” of the U.S. Bankruptcy Code that enables small businesses to use many of the provisions of Chapter 11, but without many of the costs and burdens of a typical Chapter 11 proceeding. The authors highlight that practitioners should think about electing Subchapter 5 whenever they address a company with less than $7.5 million in debt.

The article details two recent decisions from two bankruptcy courts that held that a debtor that was not operating a business on the petition date and was only administering and liquidating its remaining assets nevertheless qualified for Subchapter 5 relief.