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Subchapter 5 and small businesses
Chapter 11 bankruptcy provides a way for businesses to remain in business during bankruptcy proceedings. Chapter 11 allows companies to reorganize their debts and initiate a payment plan to cover some of their obligations. Larger companies, including major corporations, may rely on Chapter 11 bankruptcy to get back into a better fiscal position.
Chapter 11 applies to various businesses, including small ones. However, small business owners may lack the resources or abilities to deal with a complex bankruptcy filing. So, the bankruptcy laws established subchapter 5, which presents a streamlined option for small business owners struggling with massive debt.
Subchapter 5 intends to deliver relief to small businesses that cannot pay their obligations while earning a small profit. So, small businesses need not suffer monthly losses to seek Chapter 11 protections.
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