Congress originally conceived the new Subchapter V to
"streamline the bankruptcy process by which small business
debtors reorganize and rehabilitate their financial affairs."
The new Subchapter became effective on February 19, 2020, and the
COVID-19 pandemic began in earnest less than a month later. The
pandemic caused Congress to almost triple the Subchapter V debt
limit from approximately $2.7 million to $7.5 million. However, the
increased debt limit will expire in March 2022 if Congress does not
act to extend it.
Subchapter V has now been effective for slightly more than
one-and-a-half years. This article examines data on Subchapter V
cases filed in the 8th Circuit to reach early conclusions about how
Subchapter V works in the heartland.
