Tampa’s Bankruptcy Court is the busiest in the US for Subchapter V Filings

We’re #1!

The Bankruptcy Courts for the Middle District of Florida have led the way in the United States for record levels of filings in the emerging case law for small businesses. The caseload of Subchapter V cases in the Middle District hit 406 of the 4800 total Subchapter V cases nationwide in 2022. With bankruptcy cases rising in 2023 to levels approaching 2008, the quicker, simpler Subchapter V cases are taking some stress off the Courts.

Subchapter V of Chapter 11 Bankruptcy, introduced by the Small Business Reorganization Act (SBRA) in 2019, offers a streamlined bankruptcy process for certain individuals and businesses with commercial debts. Originally designed for debts under $2,725,625, the limit was increased to $7.5 million by the CARES Act. Subchapter V provides an efficient and cost-effective alternative to traditional Chapter 11 bankruptcy, making it more accessible for small businesses. It allows debtors to spread their debt over three to five years, pays creditors with disposable income, and most notably waives the absolute priority rule. Subchapter V also simplifies the confirmation process, appoints a Subchapter V Trustee to mediate between the debtor and creditors, and eliminates the need to pay quarterly United States Trustee’s fees. For details on the Subchapter V law see our our FAQs.

In its first year, Subchapter V bankruptcies accounted for about 20% of all Chapter 11 filings, with the Middle District of Florida leading in the number of Subchapter V claims. Unlike traditional Chapter 11 cases, Subchapter V debtors have exclusive rights to file a reorganization plan within 90 days and can pay administrative expenses over the plan’s life if confirmed, as opposed to requiring full payment by the effective date of the plan.

Tampa’s business base heavily skews towards small businesses, which is one of the main reasons that the Subchapter V cases are leading the country. The other factor is the deep history of the Tampa Bankruptcy Bar – judges and lawyers in Tampa are amongst the most experienced bankruptcy experts outside of Delaware. Where Delaware has been the preference of large companies, Tampa has developed a reputation as a place where the Courts have been the most innovative in applying new dimensions of the bankruptcy law. With the new law in place four years, the Bar is hitting its comfort level.

Let us know if Jennis Morse can help in any way. We specialize in Chapter 11 business bankruptcy reorganizations, complex business transactions within debtor and creditor disputes, and commercial litigation. Our focus is on corporate bankruptcy. Contact us here.