A Lifeline Many Tampa Bay Business Owners Don’t Know Exists

A Lifeline Many Tampa Bay Business Owners Don’t Know Exists

By Lauren L. Stricker, Esq. — Bankruptcy & Restructuring Attorney

Tampa Bay’s small businesses have survived a lot — a pandemic, supply chain chaos, years of rising costs, and back-to-back hurricanes. Now, with interest rates still elevated, consumer spending softening, and tariff uncertainty rattling supply chains again, many are sitting on debt loads that felt manageable two years ago but don’t anymore.
The numbers bear this out nationally, and there’s no reason to think Tampa Bay is immune. Subchapter V small business bankruptcy elections — a streamlined reorganization tool created specifically for small businesses — increased 91 percent in February 2026 compared to a year earlier, according to data from Epiq AACER and the American Bankruptcy Institute. For all of 2025, Subchapter V filings rose 11 percent year-over-year. The ABI attributes the surge to “higher borrowing costs, softening client demand, and tighter lending standards.”
For a business owner in that position, the instinct is often to wait it out — or to assume that bankruptcy means closing the doors. Both reactions can be costly mistakes. There’s a lesser-known federal tool that was designed precisely for this moment. Most business owners have never heard of it.

What Is Subchapter V?

Subchapter V is a streamlined version of Chapter 11 bankruptcy, created by Congress in 2019 specifically because traditional Chapter 11 was too expensive and complex for most small businesses to use. The goal was straightforward: give smaller companies a realistic path to reorganize, stay open, and address debt in a way that aligns with what the business can actually afford.

At its core, Subchapter V lets a qualifying business continue operating while proposing a plan to repay creditors over three to five years, based on the company’s projected disposable income. It is not a liquidation. It is not surrender. It is a restructuring — and it is designed to get you to the other side still running.

What Makes It Different From Regular Chapter 11?

Traditional Chapter 11 involves disclosure statements, creditor committees, extensive motion practice, and legal fees that can run into the hundreds of thousands of dollars before a plan is ever confirmed. That’s fine for large corporations. For a restaurant, a contractor, or a retail shop, it’s a non-starter.

Subchapter V strips away the machinery that makes traditional Chapter 11 unworkable for smaller businesses. There is no formal disclosure statement requirement in most cases — one of the most time-consuming and expensive steps in a standard bankruptcy. There is no creditors’ committee. A trustee is appointed, but the trustee’s job is to facilitate a resolution, not take over the business. The owner stays in control.

Perhaps most importantly, Subchapter V removes what is known as the “absolute priority rule.” In a traditional Chapter 11, an owner cannot keep equity in the company unless creditors are paid in full or agree to the terms. Subchapter V eliminates that barrier — meaning an owner can retain their interest in the business while committing the company’s projected income to a repayment plan. That is a meaningful distinction for any business owner who has built something worth saving.

How the Process Works, in Plain English

Once a case is filed and the Subchapter V election is made, the business continues operating as normal. A trustee is assigned, the court holds an early status conference, and the debtor has 90 days to file a reorganization plan. That plan needs to show a brief history of the business, a realistic projection of future income, and a proposed treatment for creditors.

Only the debtor can file a plan in a Subchapter V case — there is no competing plan from creditors. And the court can confirm a plan even if not all creditors agree, as long as it is fair and meets the statutory requirements. Certain administrative expenses that would normally need to be paid upfront can instead be paid through the plan itself, easing the immediate cash pressure that often drives businesses to close.

When the plan is completed, the business receives a discharge of the restructured obligations and moves forward. For cases confirmed by consensus, discharge can happen at confirmation — not years later.

Who Qualifies?

To use Subchapter V, a business generally must be engaged in commercial or business activities, have primarily business-related debts, and fall within the debt limits established by the Bankruptcy Code. Both operating businesses and certain real estate-related entities may be eligible. If you’re not sure whether your situation qualifies, that’s worth a conversation with a restructuring attorney before the options narrow.

The Bottom Line for Tampa Bay Business Owners

Subchapter V is not a magic fix, and it is not for every situation. The business needs to demonstrate viability, meet strict deadlines, and commit to full financial transparency. It works best for companies with a solid core operation that has been compromised by debt, not for businesses that have no realistic path forward.

But for a Tampa Bay business owner who is white-knuckling it right now — managing payroll, juggling vendors, watching margins compress — knowing that this tool exists could change the calculus. The decision to file is never easy. The decision to wait too long can be worse.
Bankruptcy carries stigma it doesn’t deserve. In a region as entrepreneurial as Tampa Bay, the ability to restructure, stay open, and keep your team employed is exactly the kind of outcome this tool was built to produce.

Lauren L. Stricker is a bankruptcy and restructuring attorney based in the Tampa Bay area, focusing on Chapter 11 reorganizations for businesses and creditors. She can be reached at lstricker@shukerdorris.com.
The information in this article is for general educational purposes and does not constitute legal advice.