Augusta, GA · Subchapter 5 for Small Business
Subchapter 5 bankruptcy: restructure your debt and keep your doors open.
Subchapter 5 was built for the regular people who own and operate the restaurants, boutiques, salons and shops that hold this community together. It is a faster, more affordable way to reorganize what your business owes, stay in control, and keep operating. Claeys, McElroy-Magruder & Kitchens guide you through all of it.
The basics
What is Subchapter 5 bankruptcy?
Subchapter 5 is a streamlined version of Chapter 11, created by the Small Business Reorganization Act and effective since 2020. Traditional Chapter 11 was slow, costly and stacked against small owners. Subchapter 5 strips out the expensive parts so a small business can actually afford to reorganize, repay what it can over time, and survive. Here is how it compares.
Traditional Chapter 11
- Expensive, with U.S. Trustee quarterly fees
- A creditors' committee and a full disclosure statement
- Owners can lose their equity under the absolute priority rule
- A longer road to confirmation, often around ten months
Subchapter 5
- No U.S. Trustee quarterly fees
- Usually no creditors' committee, and no disclosure statement
- The absolute priority rule does not apply, so you can keep your ownership
- A faster road, with confirmation often in about six months
What actually happens
Your Subchapter 5, step by step.
It is designed to move quickly so your business does not bleed out while the case drags on. With us beside you, it is four clear stages.
You file, and you keep control
We file your case and the automatic stay begins, so collection activity must stop. You remain the debtor in possession and keep running your business. No outside operator steps in to take it over.
You meet your Subchapter 5 trustee
A Subchapter 5 trustee is appointed to facilitate the case and help you reach a workable plan with your creditors. The trustee provides oversight, not management. You still run the day to day.
You file your reorganization plan
Only you can propose the plan, and it is due within 90 days of filing. It lays out how you repay creditors from your projected disposable income over the next three to five years. We build it with you to keep the payments realistic.
The court confirms it, and you move forward
The court can approve your plan even if no creditor class votes for it, as long as it is fair and equitable and does not discriminate unfairly. You keep your ownership, complete your plan, and earn your discharge.
Do you qualify?
Is your business eligible for Subchapter 5?
A few requirements decide eligibility. We review all of them with you, in plain English, before anything is filed.
You run a business
An individual or a company can file, as long as you are actively engaged in commercial or business activity.
At least half is business debt
At least 50 percent of your total debt must come from business activity rather than personal loans.
Your debt is under the limit
Total debt must fall under the cap, which is about $3.42 million as of 2026. That number has moved several times, and Congress is weighing raising it back toward $7.5 million, so we confirm the figure that applies to your case today.
You meet the other rules
Single-asset real estate businesses and public companies do not qualify. We make sure your case fits before you commit.
If you are an individual rather than a business, a Chapter 13 or Chapter 7 may be the better fit. We will point you to the right one.
The upside
Why small business owners choose Subchapter 5.
It was written to give small businesses a real, affordable shot at surviving, instead of the all-or-nothing pressure of the old process.
You stay in control
You remain the debtor in possession and keep your customers, employees and suppliers. No one understands your business the way you do.
You keep your ownership
The absolute priority rule does not apply, so you can keep 100 percent of your equity even if unsecured creditors are not paid in full.
Faster and cheaper
No U.S. Trustee quarterly fees, usually no creditors' committee, and no disclosure statement. Confirmation often comes in about six months.
Consolidate your debt
Roll your business debts and the personal debts you took on to keep the business running into one manageable plan.
One creditor can't block you
The court can confirm your plan even if no class of creditors votes yes, removing one of the biggest roadblocks of traditional Chapter 11.
Built to succeed
Since 2020, small businesses reorganizing under Subchapter 5 have reached a confirmed plan far more often than under old-style small-business Chapter 11.
- The 90-day plan deadline moves fast, so preparation matters. We start building your plan from day one.
- You work closely with the Subchapter 5 trustee throughout the case.
- If the plan is confirmed without creditor consent, your discharge comes after you complete your three to five years of payments.
- Your plan must be feasible, meaning the court has to believe you can actually make it work.
Before you lock the door for good
Your business is worth more open than shut down.
Every month a struggling business bleeds cash, options narrow and the 90-day clock gets harder to beat. A free consultation tells you, quickly, whether Subchapter 5 can save what you have built.
- A clear answer on whether your business qualifies, including the current debt limit.
- A head start on the plan, so the 90-day deadline works for you, not against you.
- A path that keeps you in control and keeps your ownership intact.
- An honest read on whether Subchapter 5, another chapter, or a non-bankruptcy option fits best.
Here is the part worth acting on: the automatic stay only starts once you file, and the plan deadline starts running the same day. The sooner you call, the more room we have to build a plan the court will confirm and your business can live with.
The consultation is free and confidential. The only thing it costs is the time it takes to tell us your story.
P.S. We bring a mobile office right to your business. Do not close your doors before you call. Let Angie help.
Not a business owner?
There is a path for individuals, too.
Subchapter 5 is for businesses. If your debt is personal, one of these is likely the better fit, and we help you choose.
Chapter 13 Bankruptcy
A repayment plan for individuals that lets you keep your home and assets while you catch up over three to five years.
Chapter 7 Bankruptcy
A complete liquidation that erases qualifying debt, usually within a few months, for a clean reset.
Straight answers
Subchapter 5 questions, answered.
Talk to us
Call one of our three Georgia offices.
Augusta, GA 30901
Dublin, GA 31021
Statesboro, GA 30458
We also bring a mobile office to your business, and we are available evenings and weekends by appointment.
We are here to help
Keep what you built. Let us help you reorganize.
Tell us about your business and we will tell you, honestly, whether Subchapter 5 is the right tool. If it is, we will guide you from filing through your plan and confirmation, so you can keep your doors open and move forward.
Augusta
512 Telfair Street
Augusta, GA 30901
Phone: 706-724-6000
Fax: 706-724-3363
Dublin
1205 Bellevue Place, Suite A
Dublin, GA 31021
Phone: 478-275-8311
Fax: 478-275-8399
Statesboro
200 South Main Street
Statesboro, GA 30458
Phone: 912-764-7000
Fax: 912-489-7196
Office Hours
Monday – Thursday: 9:00 AM – 5:00 PM
Friday: 9:00 AM – 2:00 PM
Evenings & weekends by appointment.
Ready to talk? Reach out.
Pick whatever is easiest. Every conversation is free and confidential.
Text is the fastest way to reach us after hours or in an emergency. For our main office line, call 706-724-6000.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. We serve businesses and individuals throughout Augusta, Dublin, Statesboro and the surrounding CSRA. The information on this page is general and is not legal advice, and contacting the firm does not create an attorney-client relationship. Subchapter 5 debt limits and eligibility rules change over time, so please confirm current requirements with us.