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Longleaf Law Partners

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You are here: Home / Bankruptcy Buzz / The New Subchapter V Trustee

June 2, 2020

The New Subchapter V Trustee

The Small Business Reorganization Act of 2019 (SBRA) became effective on the eve of the economic free fall stemming from the COVID-19 pandemic. Longleaf Law Partner’s bankruptcy law expert, Cindy G. Oliver, explains the new law in our 13-part series, Bankruptcy Buzz.

Part 4 of 13:

Contrary to a traditional Chapter 11, a trustee is appointed in every Subchapter V small business bankruptcy case. However, the Subchapter V trustee does not operate the debtor’s small business, and the debtor maintains its debtor-in-possession status. Rather, the trustee serves as a facilitator, investigating the debtor’s business, attending the status conference and various court hearings, facilitating the development of a consensual plan of reorganization, and ensuring that the debtor commences plan payments. The involvement of a trustee increases the likelihood that a small business bankruptcy case will progress quickly, ticking off the milestones on the way to a confirmed plan.

It’s not difficult to see that a trustee’s oversight might help a debtor from falling off the rails procedurally, and hence this might be the game changer in Chapter 11 that increases the success of a small business bankruptcy reorganization. A quick road to plan confirmation will cut to the chase, and help weed out the small businesses that are dead on arrival from those that have a fighting chance on life support, and ideally save creditors time and costs spent on legal fees in bankruptcy court.

The information provided in this article does not, and is not intended to, constitute legal advice. No action should be taken in any particular circumstance or fact situation with reliance upon the information contained in this article without obtaining the advice of an attorney.

Filed Under: Bankruptcy Buzz

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