Subchapter V Bankruptcy Filings Plummeted After Congress Let Its Qualification Threshold Sunset

Lawyers are now faced with more expensive and time-consuming options for their midmarket clients, after the U.S. Senate failed to pass a bill that would have kept the bankruptcy option's debt limit to $7.5 million.

October 18, 2024 at 05:37 PM

4 minute read

Bankruptcy

By Alexander Lugo

What You Need to Know

Subchapter V cases are facing a downswing after the U.S. Senate failed to uphold its threshold.
The federal government lifted its threshold in 2020 to help businesses get through the pandemic.
With the limit going back down to $2.7 million in debt to qualify, lawyers in the space are now facing less options for their clients.

Filings for a recently crafted bankruptcy option meant to help small businesses overcome financial distress have plummeted after the U.S. Senate failed to pass a law that would keep its restrictions in place.

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