The SBRA seeks to achieve these goals by making significant changes to Chapter 11 for debtors who elect to proceed under Subchapter V. As a result of these changes:

Subchapter V debtors are not required to pay U.S. Trustee fees.
Creditors' and equity committees are not required in a Subchapter V proceeding.
Subchapter V debtors are no longer required to file disclosure statements in conjunction with Chapter 11 plans.
Subchapter V debtors must file plans within 90 days of filing, reducing total time in Chapter 11.
Subchapter V debtors are the only party allowed to file a plan.
A Subchapter V trustee (similar to a Chapter 12 or 13 trustee) is appointed for every Subchapter V case, charged primarily with assisting the debtor in consensually confirming a plan (and not seizing control of the debtor's assets and operations).
Subchapter V debtors no longer have to satisfy the "absolute priority rule," when seeking to cramdown a plan over the objection of unsecured creditors, allowing equity to remain in place without contributing new value.
Professionals employed by a Subchapter V debtor may hold claims against the debtor up to $10,000 and remain "disinterested," under the Bankruptcy Code.

In addition to these changes, Subchapter V debtors are required to make additional disclosures at the outset of their cases by filing financial reports such as recent balance sheets, statements of operations, cash flow statements, and recent federal income tax returns. Subchapter V debtors must also appear at a mandatory case status conference before the bankruptcy court, held 60 days after filing, at which the debtor presents a report on its progress toward confirming a consensual Chapter 11 plan.

Instant Insights /

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