The American Bankruptcy Institute’s Subchapter V task force will hold its second virtual public hearing at 3 p.m. EDT on June 23 to receive witness testimony from bankruptcy judges and practitioners regarding their perspectives on eligibility issues related to Subchapter V of Chapter 11 of the U.S. Bankruptcy Code. Witnesses scheduled to testify include:
- Paul M. Black (Western District of Virginia; Roanoke, VA)
- Benjamin A. Kahn (Middle District of North Carolina; Greensboro, NC)
- Kesha L. Tanabe (District of Minnesota; St. Paul, MN)
- Karen Cordry of the National Association of Attorneys General (Silver Spring, MD)
- Sumner A. Bourne of Rafool & Bourne (Peoria, IL)
- Daniel A. Velasquez of Latham, Luna, Eden & Beaudine (Orlando, FL)
- Adam Prescott of Bernstein Shur (Portland, ME)
- Robert J. Gonzales of Emerge Law (Nashville, TN)
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The ABI established its Subchapter V task force, a nine-member expert panel, earlier this year to examine case law and statistical data under Subchapter V since its enactment in 2020 through the present. This study will consider, among other things, how the subchapter is working in practice and whether it is achieving certain underlying objectives, such as assisting debtors and creditors in resolving the reorganization cases of small- and medium-sized businesses more effectively and efficiently, and what improvements it might need. The task force intends to solicit input about Subchapter V from the public via virtual hearings and its forthcoming website, culminating in a final report to be delivered in April 2024.
The task force kicked off its virtual public hearing schedule on June 9 with experts providing their general experiences with Subchapter V.
The concept of Subchapter V started as one of the centerpiece recommendations of the ABI’s Commission to Study the Reform of Chapter 11, which published its final report and recommendations in 2014. Subchapter V was formalized in the U.S. Bankruptcy Code by the enactment of The Small Business Reorganization Act of 2019, which went into effect on Feb. 19, 2020. The eligibility limit for small businesses looking to elect to file under Subchapter V was originally $2,725,625 of debt, but the threshold was increased to $7.5 million with the enactment of the Coronavirus Aid, Relief and Economic Security Act on March 27, 2020, in response to the economic distress caused by the COVID-19 pandemic. The increased debt limit received two subsequent extensions that were signed into law, but the last extension is due to sunset on June 21, 2024.
