Subchapter V of Chapter 11, added by the Small Business Reorganization Act of 2019 (SBRA), provides a streamlined reorganization path for eligible small-business debtors. A Subchapter V trustee is appointed in every Subchapter V case (11 U.S.C. § 1183(a)). Unlike a Chapter 11 trustee appointed under § 1104, the Subchapter V trustee does not displace the debtor in possession in the ordinary case; the debtor generally stays in control of the business while the trustee’s central job is to facilitate the development of a consensual plan of reorganization (§ 1183(b)(7)).
Appointment and supervision
Subchapter V trustees are appointed by the United States Trustee from a panel maintained under 28 U.S.C. § 586. (In Alabama and North Carolina, which are outside the U.S. Trustee Program, the Bankruptcy Administrator performs the equivalent function.) A trustee who can no longer perform the duties of the position must immediately advise the United States Trustee (28 U.S.C. § 586(b)). The trustee is a fiduciary to the bankruptcy estate.
The status conference
The court holds a status conference within 60 days of the order for relief to further the expeditious and economical resolution of the case (11 U.S.C. § 1188(a)). Not later than 14 days before that conference, the debtor files a report detailing efforts to attain a consensual plan (§ 1188(c)). The Subchapter V trustee appears and is heard at the status conference.
Statutory duties (11 U.S.C. § 1183(b))
Section 1183 incorporates certain Chapter 7 trustee duties (§ 704(a)) and Chapter 11 trustee duties (§ 1106(a)). As summarized in the USTP’s Subchapter V Trustee Handbook, the duties include, but are not limited to:
- Be accountable for all property received [§ 704(a)(2)].
- If a purpose would be served, examine proofs of claim and object to any improper claim [§ 704(a)(5)].
- If advisable, oppose the discharge of the debtor [§ 704(a)(6)].
- Furnish information about the estate to parties in interest, unless the court orders otherwise [§ 704(a)(7)].
- Make a final report and file a final account of the estate’s administration [§ 704(a)(9)].
- If the court so orders for cause, investigate the debtor’s acts, conduct, assets, liabilities, financial condition, and the operation of the business, and file a statement of the investigation [§ 1106(a)(3), (4)].
- After plan confirmation, file such reports as are necessary or as the court orders [§ 1106(a)(7)].
- Appear and be heard at the § 1188 status conference and at any hearing on the value of property subject to a lien, plan confirmation, post-confirmation plan modification, or the sale of estate property [§ 1183(b)(3)].
- Ensure that the debtor commences making timely payments under a confirmed plan [§ 1183(b)(4)].
- If the debtor ceases to be a debtor in possession, perform the expanded duties the Code then assigns (including operating the business and the § 1106 duties) [§ 1183(b)(5)].
- Facilitate the development of a consensual plan of reorganization [§ 1183(b)(7)].
Distribution and compensation
In a non-consensual (“cramdown”) plan confirmed under § 1191(b), the Subchapter V trustee typically disburses plan payments to creditors; in a consensual plan the debtor usually makes distributions directly. Subchapter V trustee compensation is determined under 11 U.S.C. § 330 (reasonable compensation for actual, necessary services), and is distinct from the percentage-fee structures used for standing Chapter 13 trustees and asset-case Chapter 7 panel trustees. OBP does not publish per-trustee compensation figures.
How this differs from a Chapter 11 (§ 1104) trustee
A trustee appointed under § 1104 ordinarily replaces the debtor in possession and runs the estate. A Subchapter V trustee ordinarily does not: the debtor stays in possession, and the trustee’s role is oversight and plan facilitation, unless and until the debtor is removed as debtor in possession.
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