Franchisees Benefit From Subchapter V Bankruptcy Option
When franchisees choose to financially reorganize under the Bankruptcy Code, they may be the right size to choose to reorganize under subchapter V of Chapter 11. Subchapter V proceedings are simpler, more streamlined and less expensive than a traditional Chapter 11 and is ideal to allow the self-employed to revitalize their small business. Where the franchisor and the franchisee cannot reconcile, subchapter V may provide the franchisee with breathing room and leverage to be revitalized.
November 19, 2024 at 12:51 PM
5 minute read
BankruptcyWhen franchisees choose to financially reorganize under the Bankruptcy Code, they may be the right size to choose to reorganize under subchapter V of Chapter 11. Subchapter V proceedings are simpler, more streamlined and less expensive than a traditional Chapter 11 and is ideal to allow the self-employed to revitalize their small business. Where the franchisor and the franchisee cannot reconcile, subchapter V may provide the franchisee with breathing room and leverage to be revitalized. In an unpublished decision, a court noted that the debtor and the franchisor may at the commencement of the case may be at each other’s throats, but during the case may negotiate a different outcome. See In re Pinnacle Foods of California, Case No. 24-11015 (Bankr. E.D. Cal. Aug. 15, 2024).
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