Subchapter V Bankruptcy in Orange County

30 Years of Bankruptcy Experience. Streamlined Reorganization for Small Businesses.

Subchapter V is a reorganization track within Chapter 11, created by the Small Business Reorganization Act of 2019, that strips away much of the procedural weight that makes traditional Chapter 11 inaccessible for smaller businesses. Lower administrative costs, a faster timeline, and a more direct path to plan confirmation make it a practical option for Orange County small businesses carrying significant debt but still generating revenue. At The Law Offices of Joseph M. Tosti, APC, we assess whether Subchapter V fits a business’s situation and guide ownership through each stage of the reorganization process.

We’ve represented consumers and businesses in bankruptcy matters for more than 30 years, based in Irvine and serving clients throughout Orange County, Los Angeles County, and the Inland Empire. As a federally recognized debt relief agency, we’re authorized to guide clients in filing for bankruptcy under the U.S. Bankruptcy Code.

To find out whether your business qualifies and what reorganization could look like, schedule a free consultation with The Law Offices of Joseph M. Tosti, APC. Call us at (949) 245-6288.

What Qualifies a Business for Subchapter V

To elect Subchapter V, a business must qualify as a small business debtor. That means it must be engaged in commercial or business activity, and at least 50% of its debts must arise from that activity. The current debt eligibility ceiling is $3,424,000 in non-contingent, liquidated secured and unsecured debt combined.

That figure has shifted over time. The threshold was temporarily raised to $7.5 million under the CARES Act during the pandemic, then reverted to an inflation-adjusted level after that increase expired in June 2024. We review eligibility early, before any filing decision is made, so businesses understand exactly where they stand before committing to a course of action.

How Subchapter V Differs from Standard Chapter 11

The procedural differences between Subchapter V and traditional Chapter 11 are substantial, and most of them favor the small business debtor:

• No creditors’ committee: Standard Chapter 11 often requires an unsecured creditors’ committee, adding cost and oversight. Subchapter V eliminates that requirement.
• No formal disclosure statement: The reorganization plan doesn’t need a separate, court-approved disclosure statement filed alongside it.
• Appointed Subchapter V trustee: A trustee is assigned in every case, not to take control of the business but to help the parties reach a consensual plan.
• Equity retention without the absolute priority rule: In traditional Chapter 11, the absolute priority rule requires unsecured creditors to be paid in full before ownership retains any equity, which can block reorganization entirely. Subchapter V removes that barrier, allowing owners to keep their equity while committing projected disposable income to creditors over three to five years.

Businesses with simpler financial structures may complete the process within several months, compared to the multi-year timelines that standard Chapter 11 can require.

Filing in the Santa Ana Division

Orange County Subchapter V cases are filed with the U.S. Bankruptcy Court, Central District of California, Santa Ana Division, located in the Ronald Reagan Federal Building and U.S. Courthouse in Santa Ana. We’ve worked within this court for more than 30 years and understand how local creditor dynamics, commercial lease structures, and the Santa Ana Division’s confirmation standards interact in practice.

We serve businesses in Irvine, Santa Ana, Costa Mesa, Newport Beach, Mission Viejo, Lake Forest, and throughout Orange County. That local familiarity shapes how we approach plan drafting and creditor negotiations from the start of a case.

Start with a Free Consultation

Filing for Subchapter V generally triggers the automatic stay, which stops creditor collection actions, including calls, lawsuits, and wage garnishments. Our role doesn’t end at confirmation. We work to equip clients with the knowledge and tools to build toward financial stability after the case concludes, and we take a discreet, supportive approach throughout.

A free consultation is the right place to begin. We can review your debt structure, assess eligibility, and walk you through what the process would involve for your specific business. Call (949) 245-6288 to schedule.