Houston Subchapter V Bankruptcy Attorney

The Smarter Chapter 11 for Small Business Owners

Subchapter V of Chapter 11 — created by Congress in 2019 through the Small Business Reorganization Act — is one of the most significant bankruptcy law developments in decades. It was built specifically for small business owners who need to restructure debt without the prohibitive cost, complexity, and time commitment of a full Chapter 11 case.

If you own a business with manageable debt and want to keep operating, retain your equity, and restructure what you owe on terms you can actually meet, Subchapter V may be exactly the tool you need. At the Law Office of Jeremy T. Wood, PLLC, I handle Subchapter V cases for Houston-area small business owners who want a real reorganization strategy — not just a filing service.

What Is Subchapter V Bankruptcy?

Subchapter V is a streamlined form of Chapter 11 designed for small business debtors. It preserves the core protections of a full Chapter 11 — the automatic stay, the ability to restructure debt, and the right to keep operating during the case — while eliminating most of the expensive, time-consuming features that make traditional Chapter 11 impractical for small businesses.

The most powerful difference: in a traditional Chapter 11, business owners generally cannot retain their equity unless unsecured creditors are paid in full or vote to approve the plan. Subchapter V changes that. A business owner can confirm a reorganization plan and keep their equity simply by committing projected disposable income to creditors for three to five years — even over creditor objections.

Who Qualifies for Subchapter V?

To elect Subchapter V, you must be a “small business debtor” engaged in commercial or business activities. As of April 1, 2025, the debt limit is $3,424,000 in total noncontingent, liquidated debt — secured and unsecured combined — not counting debt owed to insiders or affiliates. This covers a wide range of business owners:

• Sole proprietors whose business and personal debts are intertwined
• LLCs, S-corps, and C-corps with qualifying total debt levels
• Professionals — doctors, dentists, contractors, consultants — with practice debt
• Restaurants, retailers, and service businesses
• Construction firms and tradespeople
• Real estate investors with operational debt (not purely passive real estate holdings)

If your debt exceeds $3,424,000, traditional Chapter 11 may still be the right path. I handle both, and I’ll tell you plainly which gives you the better outcome.

Key Advantages Over Regular Chapter 11

No Creditors’ Committee

In a traditional Chapter 11, the U.S. Trustee typically appoints an unsecured creditors’ committee — a group of your largest unsecured creditors who have the right to investigate your finances, hire their own professionals at your expense, and oppose your plan. Subchapter V eliminates the creditors’ committee entirely. The process is simpler, less adversarial, and your legal costs are substantially lower.

A Trustee Who Works With You, Not Against You

Every Subchapter V case has a standing trustee, but this trustee’s statutory role is to facilitate a consensual reorganization plan — not to take over your business or liquidate your assets. You remain in possession and in control as the “debtor in possession” throughout the case.

No Disclosure Statement Required

Traditional Chapter 11 requires a lengthy disclosure statement — essentially a creditor prospectus — before a reorganization plan can even be voted on. This document alone can cost tens of thousands of dollars to prepare. Subchapter V eliminates it entirely.

You Can Keep Your Business Equity

This is the defining feature of Subchapter V. Under traditional Chapter 11, equity holders (you, the owner) generally can’t retain their interest unless unsecured creditors are paid in full. Subchapter V’s disposable income standard means you can retain ownership by committing what you can actually afford to pay — even if that doesn’t fully pay unsecured creditors.

Faster: Plan in 90 Days

A traditional Chapter 11 can spend 12 to 36 months in court before a plan is confirmed. Subchapter V requires the debtor to file a reorganization plan within 90 days of the petition date. Most cases are fully resolved within five to seven months. You get back to running your business instead of spending years in bankruptcy proceedings.

Dramatically Lower Cost

No creditors’ committee. No disclosure statement. A cooperative trustee. A compressed timeline. These differences add up to substantially lower total legal cost compared to a traditional Chapter 11 — in many cases, less than half. For small business owners, Subchapter V brings Chapter 11 reorganization within practical reach for the first time.

The Subchapter V Process, Step by Step

1. Free Consultation: I review your debt structure, cash flow, and operations to determine whether Subchapter V is the right fit and whether you qualify under the debt limit.
2. Filing the Petition: We file your Chapter 11 petition with a Subchapter V election in the Southern District of Texas. The automatic stay takes effect immediately — stopping all collection activity, lawsuits, repossessions, and foreclosure proceedings.
3. Trustee Appointment: The U.S. Trustee appoints a Subchapter V standing trustee within a few days of filing. Their mandate is to facilitate a workable plan, not to interfere with your operations.
4. Status Conference: Within 60 days of filing, the court holds an initial status conference to assess the case’s trajectory. I’ll prepare you thoroughly for this hearing.
5. File the Reorganization Plan: Within 90 days of the petition date, we file your plan. The plan addresses secured claims based on collateral value and commits projected disposable income to unsecured creditors for three to five years.
6. Plan Confirmation: If creditors consent, the plan can be confirmed quickly. If creditors object, the plan can still be confirmed over their objections as long as it meets the disposable income commitment and passes the “best interests” test — this is the “cramdown” feature that makes Subchapter V so powerful.
7. Plan Payments: You make payments to the Subchapter V trustee, who distributes them to creditors. Your business continues operating throughout.
8. Discharge: After completing plan payments, you receive a discharge of remaining eligible debts. Your business emerges from bankruptcy with a restructured debt load and a viable path forward.

What Happens to Your Personal Guarantee?

Most small business owners have personally guaranteed business loans. For sole proprietors, Subchapter V can address both business and personal debt in a single case. For LLCs and corporations, the personal guarantee generally survives the business’s bankruptcy — but strategic planning can address it, including a concurrent personal bankruptcy where appropriate.

This is an area where experienced counsel makes a critical difference. I’ll map out every guaranteed and non-guaranteed obligation so there are no surprises.

SBA Loans in Subchapter V

SBA EIDL loans, 7(a) loans, and other SBA-backed debt can be restructured in a Subchapter V case. These loans are often secured by blanket liens on business assets, and Subchapter V provides tools for addressing them that straightforward negotiation with the SBA doesn’t. I’ve handled multiple cases involving significant SBA debt — it’s manageable with the right strategy.

Subchapter V vs. Shutting Down: Is Reorganization Worth It?

Chapter 7 liquidation means closing the business. The trustee sells assets and distributes proceeds to creditors. You walk away — and so does everything you’ve built: your customer relationships, your contracts, your employees, your reputation.

Subchapter V is for owners who want to preserve what they’ve built. The question I always ask: is the business fundamentally viable if the debt burden were restructured? If the answer is yes — if the problem is debt structure and not the underlying business model — Subchapter V is almost certainly worth a serious conversation.

Why Work With Me on Your Subchapter V Case

Subchapter V is still a relatively young area of law, and courts continue to issue important decisions on confirmation standards, the treatment of secured claims, and plan requirements. I stay current on these developments because my clients’ outcomes depend on it.

I practice bankruptcy law exclusively. When you hire the Law Office of Jeremy T. Wood, PLLC, you work directly with me — from the initial consultation through plan confirmation and discharge. I know the Southern District of Texas, the local Subchapter V trustees, and the judges who will decide your case.

If your business is under serious financial pressure and you want to know whether Subchapter V can save it, call me at (713) 366-1288 for a free, confidential consultation. There’s no obligation — just honest answers about your options.