22 July 2025
/ Geoffrey J. Peters
Subchapter V Debt Limits Under Review: What Bankruptcy Professionals Need to Know
The House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust recently held a hearing titled Bankruptcy Law: Overview and Legislative Reforms. The subcommittee invited six witnesses to discuss topics including chapter 11 subchapter V debt eligibility limits. The witnesses included two bankruptcy judges, three college professors, and one bankruptcy attorney.
One of the main topics they focused on was the chapter 11 subchapter V debt limits. Congress enacted subchapter V of chapter 11 in the Bankruptcy Code on February 19, 2020 as part of the Small Business Reorganization Act of 2019 (SBRA). Subchapter V had an initial debt limit of $2,725,625. However, under the CARES Act, the debt limit temporarily increased to $7,500,000 until June 21, 2024. The debt limit is currently $3,024,725. Subchapter V allows small businesses to reorganize under the bankruptcy code. Subchapter V has debtor-friendly provisions including accelerated timelines for cases. It also enables a faster and less expensive restructuring process with fewer procedural hurdles and reduced administrative costs.
All of the witnesses at the hearing were in favor of increasing the debt limits to $7,500,000. One witness testified that the subchapter V is the best change to the bankruptcy code we have seen in years. Based upon the testimony, it is expected that Congress will look to increasing the debt limits for subchapter V in the near future.
Our team is constantly monitoring this topic. If you have any questions or would like to learn more about Weltman’s bankruptcy recovery solutions, please connect with Shareholder Geoffrey Peters at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
One of the main topics they focused on was the chapter 11 subchapter V debt limits. Congress enacted subchapter V of chapter 11 in the Bankruptcy Code on February 19, 2020 as part of the Small Business Reorganization Act of 2019 (SBRA). Subchapter V had an initial debt limit of $2,725,625. However, under the CARES Act, the debt limit temporarily increased to $7,500,000 until June 21, 2024. The debt limit is currently $3,024,725. Subchapter V allows small businesses to reorganize under the bankruptcy code. Subchapter V has debtor-friendly provisions including accelerated timelines for cases. It also enables a faster and less expensive restructuring process with fewer procedural hurdles and reduced administrative costs.
All of the witnesses at the hearing were in favor of increasing the debt limits to $7,500,000. One witness testified that the subchapter V is the best change to the bankruptcy code we have seen in years. Based upon the testimony, it is expected that Congress will look to increasing the debt limits for subchapter V in the near future.
Our team is constantly monitoring this topic. If you have any questions or would like to learn more about Weltman’s bankruptcy recovery solutions, please connect with Shareholder Geoffrey Peters at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
