The Bankruptcy Threshold Adjustment Act of 2026 was passed unanimously by the U.S. Senate on August 3, 2026, which would move to permanently raise the debt limit for small businesses seeking protection under Subchapter V of Chapter 11 to $7.5 million. The current debt limit for eligibility is $2.5 million in debt. When this bill is enacted into law, it will make Subchapter V accessible to more small businesses. Why is this important? A traditional Chapter 11 case can be time-consuming and cost-prohibitive for small and mid-size businesses. A Subchapter V Chapter 11 is designed for small businesses, and is a leaner version of Chapter 11 that fast-tracks the reorganization process, thereby cutting down on costs to a small business. There are also no quarterly fee requirements as in a traditional Chapter 11. Since being enacted in 2020, Subchapter V bankruptcy has allowed more small businesses to utilize the reorganization tools available in the Bankruptcy Code.
If you own a small business, and want to discuss your options to reorganize debt and move forward then please reach out to Weiner Law Firm, P.C. to discuss.