Subchapter V Small Business Reorganization Plan

SUBCHAPTER V SMALL BUSINESS REORGANIZATION PLAN

CAPTION

Case No.: [__________]
Court: United States Bankruptcy Court for the [__________ District of __________]
Chapter: Chapter 11 (Subchapter V)
Filing Date: [__/__/____]

I. INTRODUCTION

A. Debtor Identification

This Subchapter V Small Business Reorganization Plan (the "Plan") is filed by [DEBTOR LEGAL NAME], a [sole proprietor / partnership / corporation / limited liability company], doing business as [if applicable: __________________], (the "Debtor"), pursuant to 11 U.S.C. §§ 1181–1195 (Subchapter V of Chapter 11 of the Bankruptcy Code).

B. Plan Purpose

The Debtor proposes, through this Plan, to reorganize its debts and continue its business operations. The Plan reflects the Debtor's commitment to meet its obligations while maintaining its business enterprise. The Debtor believes that confirmation and performance of the Plan is in the best interest of the Debtor, its creditors, and other parties in interest.

C. Jurisdiction and Eligibility

The Debtor qualifies as a "small business debtor" within the meaning of 11 U.S.C. § 101(51D), based on the following:

☐ Debtor is an individual engaged in business (including family farmer) with primarily business debts;

☐ Debtor is a partnership or corporation (other than a family farmer) with primarily business debts;

☐ Total debts (excluding certain domestic obligations and residential mortgages on the Debtor's principal residence) are below the current threshold established under Subchapter V.

II. CLASSIFICATION OF CLAIMS AND INTERESTS

A. Administrative Claims and Priority Claims

All allowed administrative expenses, including professional fees allowed under 11 U.S.C. § 330, and allowed priority unsecured claims, shall be classified together as an Administrative/Priority Class.

1. Administrative Claims

Administrative claims include, without limitation:

• Reasonable fees and expenses of the Subchapter V trustee (as a percentage of payments or fixed annual amount);
• Professional fees (including fees of the Debtor's attorney and accountant);
• Costs of administration of the case.

2. Priority Unsecured Claims

Priority claims under 11 U.S.C. § 507 shall receive treatment as a separate subclass, including:

• Claims for wages, salaries, and commissions (capped per 11 U.S.C. § 507(a)(4));
• Tax claims of governmental units (capped per 11 U.S.C. § 507(a)(8));
• Claims for contributions to employee benefit plans (capped per 11 U.S.C. § 507(a)(5));
• Other statutory priority claims.

B. Secured Claims

1. Real Property [if applicable]

[PROPERTY DESCRIPTION]: [ADDRESS]

Lienholder: [_________________________________]
Principal Balance: $[_______________]
Current Monthly Payment: $[_______________]
Interest Rate: [____]%
Maturity Date: [__/__/____]
Treatment:
☐ Assumption and maintenance of regular payments
☐ Cure of default in the amount of $[_______________], to be paid [specify payment terms]
☐ Modification under 11 U.S.C. § 1194 [specify terms]
☐ Surrender of property

2. Other Secured Claims

Lienholder: [_________________________________]
Collateral: [_________________________________]
Claim Amount: $[_______________]
Treatment:
☐ Assumption of debt; lien retained
☐ Surrender of collateral
☐ Cram-down [if applicable, specify terms]

C. General Unsecured Claims

Class 1 – General Unsecured Claims

All allowed general unsecured claims, including debts to suppliers, credit card companies, unsecured loans, and other creditors without priority or security interest, shall constitute the General Unsecured Class.

Estimated Amount of Class: $[_______________]

D. Equity Interests [if applicable]

Equity interests held in the Debtor's business are not addressed in this Plan. Upon confirmation, equity interests shall be treated in accordance with applicable law.

III. TREATMENT OF CLASSES

A. Administrative/Priority Class

Administrative and priority claims shall be paid in full, with interest at the contract rate or applicable legal rate, from the Debtor's cash flow as follows:

Payment Schedule:

B. Secured Claims

1. Real Property Liens

Secured creditors shall retain their liens upon confirmation. Payments shall be made as follows:

• [LIENHOLDER NAME]: $[_______________] [monthly/quarterly], beginning [__/__/____], continuing for [___] months [or until paid in full / or until maturity on [__/__/____]].

2. Equipment and Personal Property Liens

• [LIENHOLDER NAME]: $[_______________] [monthly/quarterly], beginning [__/__/____], continuing for [___] months [or specify alternative terms].

C. General Unsecured Claims

General unsecured creditors shall receive a percentage distribution from the Debtor's available cash flow, after satisfaction of administrative, priority, and secured claims. Unsecured creditors shall receive equal treatment on a pro-rata basis.

Estimated Percentage Recovery: [___]% of allowed claims

Payment Schedule:

Beginning on [__/__/____], the Debtor shall pay general unsecured creditors the sum of $[_______________] per [month/quarter/year], continuing for [___] months [or [number] years, as set forth in Section IV below].

Unsecured creditors shall share pro-rata in all payments according to the amounts of their allowed claims.

IV. PROJECTIONS AND FINANCIAL PLAN (3–5 YEAR CASH FLOW)

A. Revenue Projections

The Debtor projects the following gross revenues during the plan period:

B. Operating Expense Projections

C. Net Operating Income and Plan Payments

D. Assumptions and Sensitivity

The projections are based on the following assumptions:

☐ No material change in the Debtor's customer base or market conditions;

☐ Continued operation of the business at substantially current levels;

☐ No major equipment replacement or capital expenditures beyond routine maintenance;

☐ No material adverse change in the regulatory or competitive environment;

☐ [Additional assumptions: _________________________________________________________________]

Sensitivity to Key Variables: A [10%-20%] reduction in projected revenues would [require extension of plan term / require creditor consent / be manageable with existing margin].

V. MEANS OF IMPLEMENTATION

A. Source of Funds

The Debtor shall fund the Plan through the following sources:

1. Operating Cash Flow

The Debtor's primary source of plan payments shall be cash generated from ongoing business operations, as projected in Section IV above.

2. Use of Assets

☐ The Debtor may [describe any proposed liquidation of non-essential assets, sale of property not necessary to operations, etc.]: _________________________________________________________________

3. Refinancing or New Financing

☐ The Debtor may seek [specify type]: _________________________________________________________________

B. Business Operations

The Debtor shall continue to operate its business in the ordinary course, subject to the restrictions and requirements of this Plan and the Bankruptcy Code. The Debtor shall:

• Maintain all business licenses and permits;
• Maintain adequate business insurance;
• Comply with all applicable laws and regulations;
• Preserve its business reputation and customer relationships;
• Reinvest retained earnings to maintain competitiveness and business viability.

C. Custody and Control of Property

The Debtor shall retain custody and control of all property of the estate. The Debtor shall manage its business operations, enter into ordinary course contracts, and make operational decisions necessary to execute the Plan and generate projected cash flow.

D. Treatment of Other Debts and Liabilities

1. Executory Contracts and Unexpired Leases

The Debtor shall assume the following material executory contracts and leases, and shall cure any defaults therein:

[_________________________________________________________________]

2. Post-Petition Claims and Tort Liabilities

All claims and liabilities arising post-petition shall be paid in the ordinary course of business by the Debtor.

VI. SUBCHAPTER V TRUSTEE

A. Appointment and Role

A chapter 11 trustee shall be appointed and serve throughout the plan period, as required by 11 U.S.C. § 1183. The Subchapter V trustee shall perform the duties and functions prescribed by law, including:

• Collecting and distributing plan payments;
• Ensuring debtor compliance with the Plan and Bankruptcy Code;
• Monitoring the Debtor's financial performance against projections;
• Investigating the Debtor's financial affairs and business operations;
• Reviewing the feasibility of plan performance;
• Filing required reports with the court.

B. Trustee Fees and Expenses

The Subchapter V trustee shall receive compensation as follows:

☐ Percentage-Based: [___]% of payments distributed to creditors (subject to court approval and statutory caps);

☐ Fixed Annual Fee: $[_______________] per year;

☐ Hybrid Arrangement: $[_______________] fixed, plus [___]% of plan payments in excess of $[_______________] per year.

Reasonable expenses incurred by the trustee in administering the case shall be paid from estate assets as approved by the court.

C. Duties of Trustee

The trustee shall:

• Collect payments from the Debtor according to the Plan;
• Distribute payments to allowed creditors according to the Plan;
• Monitor the Debtor's compliance with the Plan and Bankruptcy Code;
• File quarterly reports regarding: (i) receipts and disbursements; (ii) Debtor's income and expenses; and (iii) status of plan performance;
• Investigate the Debtor's financial affairs, business operations, and the feasibility of plan performance;
• Seek to maximize value for creditors consistent with plan confirmation and execution.

VII. FAIR AND EQUITABLE ANALYSIS

A. Legal Standard

Under 11 U.S.C. § 1191(c), this Plan may be confirmed even if not all classes vote to accept it, provided the Plan is "fair and equitable" and does not discriminate unfairly. The Debtor believes this Plan satisfies the fair and equitable requirement as follows:

B. Treatment of Secured Claims

1. Real Property

Secured creditors retain their liens on the property securing their claims. Except to the extent modified under 11 U.S.C. § 1194, the Debtor shall make adequate payments with regard to each lien, ensuring the creditor is provided with the indubitable equivalent of its claim.

2. Other Secured Claims

Each secured creditor shall receive treatment ensuring it receives value equal to its allowed secured claim, either through retention of lien and payment of the full claim amount, or through surrender of collateral. The value to be received shall be no less than the value of the creditor's interest in the property securing the claim.

C. Treatment of Unsecured Claims

1. Absolute Priority Rule (Modified)

Under the modified absolute priority rule applicable to Subchapter V cases, junior unsecured creditors and equity interests do not have the unfettered veto power they would in a traditional Chapter 11 plan. However, absent acceptance by all impaired classes, the following apply:

• General unsecured creditors shall receive a distribution from plan proceeds;
• No class junior to unsecured creditors shall receive any distribution on account of their junior interest unless unsecured claims are paid in full with interest.

2. Equity Interests

The Debtor's equity interest [or interests in the Debtor's ownership structure] are addressed as follows:

☐ Equity retained by the Debtor and subject to confirmation of the Plan;

☐ [Specify treatment of other equity interests, if any]: _________________________________________________________________

D. Unfair Discrimination Analysis

This Plan does not discriminate unfairly against any class. Creditors in the same class receive equal treatment on a pro-rata basis according to the amounts of their allowed claims. Different classes are treated differently only to the extent required or permitted by the Bankruptcy Code and based upon the nature and priority of their claims.

E. Likelihood of Plan Success

Based on the projections and financial analysis set forth in Section IV, the Debtor believes it is more likely than not that it will be able to meet its obligations under the Plan. The Debtor's business remains viable and capable of generating the cash flow necessary to fund plan payments while meeting operational needs.

VIII. EFFECTIVE DATE AND COMMENCEMENT OF PAYMENTS

A. Effective Date

The Plan shall become effective on the date that is the later of: (i) the date this Plan is confirmed by the Bankruptcy Court; or (ii) the date of entry of a final Order confirming the Plan if that Order is subject to appeal.

B. Commencement of Plan Payments

Except as otherwise provided in this Plan, all payments due under the Plan shall commence on the first day of the [month following confirmation / first calendar month following confirmation], and shall continue according to the payment schedule set forth in Section III above.

C. Plan Term

The Plan is anticipated to run for [___] months [or [number] years], concluding on [__/__/____], unless extended by agreement of the Debtor and the Subchapter V trustee with court approval, or accelerated by early full payment.

IX. RETENTION OF JURISDICTION AND MISCELLANEOUS PROVISIONS

A. Court Jurisdiction

The Bankruptcy Court shall retain jurisdiction over this case and all matters arising under or related to this Plan, including:

• Confirmation and interpretation of the Plan;
• Resolution of disputes concerning claim allowance and distribution;
• Modification of the Plan pursuant to 11 U.S.C. § 1193;
• Enforcement of the Plan and collection of payments;
• Discharge of the Debtor upon successful completion of the Plan.

B. Modification of the Plan

The Plan may be modified prior to confirmation by the Debtor. After confirmation, the Plan may be modified by the Debtor or the Subchapter V trustee only with the written consent of creditors holding at least two-thirds in amount and more than one-half in number of claims in each impaired class, or with the approval of the Bankruptcy Court upon showing of cause.

C. Assumption and Rejection of Executory Contracts

Except as otherwise provided herein, all executory contracts and unexpired leases not assumed shall be rejected. The Debtor assumes all obligations with respect to assumed contracts and shall cure any existing defaults.

D. Discharge

Upon successful completion of plan payments and performance of all obligations under the Plan, the Debtor shall receive a discharge of all debts provided for in the Plan, except as provided by law.

E. Miscellaneous

• Notices: All notices required by this Plan shall be sent to addresses to be established by the Subchapter V trustee.
• Governing Law: This Plan shall be governed by the Bankruptcy Code and applicable federal bankruptcy law.
• Severability: If any provision of this Plan is determined to be invalid or unenforceable, such provision shall be severed and the remainder of the Plan shall remain in full force and effect.

CERTIFICATION

The Debtor certifies that:

☐ All information contained in this Plan is true and correct to the best of the Debtor's knowledge;

☐ The Debtor has received appropriate legal and financial advice in connection with this Plan;

☐ The Debtor understands its obligations under this Plan and the Bankruptcy Code;

☐ The Debtor believes the Plan is feasible and that the Debtor can meet its obligations thereunder.

Dated: [__/__/____]

Respectfully submitted:

[DEBTOR LEGAL NAME]

By: ___________________________________
Name (Print): ___________________________________
Title: ___________________________________

APPROVED BY:

[DEBTOR'S ATTORNEY]
Attorney for the Debtor
[Address]
[Phone]
[Email]
Bar Number: ___________________________________

SOURCES AND REFERENCES

• 11 U.S.C. §§ 1181–1195 (Subchapter V of Chapter 11 – Small Business Reorganization)
• Small Business Reorganization Act of 2019 (Pub. L. 116–54)
• COVID-related Bankruptcy Relief Extensions (CARES Act; CBCA 2024) – debt threshold provisions
• Federal Rules of Bankruptcy Procedure, Rule 3016 (filing of plan) and related rules
• Local Rules for individual federal courts
• Official Bankruptcy Forms (as applicable)