Five years ago, Congress created Subchapter V, a bankruptcy law designed to help small businesses eliminate debt and continue operations. This law has been seen as a positive development for small businesses looking to restructure their finances and stay afloat during difficult times. However, critics, including banking trade groups, have expressed concerns about how the law may limit the rights of creditors.
To understand the impact of Subchapter V on businesses and creditors, a task force at the American Bankruptcy Institute conducted a study. The research aimed to examine how both parties have been affected by the program and what potential challenges may arise in the future. If Congress does not extend certain pandemic-era modifications this summer, Subchapter V may undergo significant changes that could impact its effectiveness.
Critics argue that Subchapter V may limit the rights of creditors, while proponents say it provides a streamlined process for bankruptcy and debt relief that allows many businesses to survive and continue operating. The ongoing study by the American Bankruptcy Institute task force will help to shed light on the overall impact of Subchapter V and inform potential changes to the law in the future.