Subchapter V Strategies: Challenging Eligibility and Enforcing Disposable Income Requirements

This CLE webinar will address how creditors can prevent the manipulation of Subchapter V by challenging the election eligibility and by paying careful attention to the projected disposable income. The panel will discuss options for small businesses, guide counsel through eligibility requirements under Subchapter V, and review risks related to the projected disposable income standard for confirmation.

Most debtors who can do so are electing to proceed under Subchapter V of Chapter 11, although other options remain. Creditors, however, are advised to be wary of large companies attempting to shoehorn themselves into Subchapter V to circumvent Chapter 11 creditor protections.

Subchapter V permits deferred payment of often significant post-petition expenses and obligations over the life of the plan and abolishes the absolute priority rule if the debtor commits all "projected disposable income" to plan payments.

Creditors should be ready to challenge eligibility for election as a Subchapter V debtor, including whether the debts asserted by the debtors are accurate. If a debtor's future disposable income is greater than projected, creditors will not receive any greater distribution.

Listen as this experienced panel of bankruptcy counsel discusses options for small businesses, eligibility under Subchapter V, and the projected disposable income standard.