Lone Star Counsel \u2014 Attorneys & Advisors
Restructuring · Chapter 11 · Subchapter V
Attorney. CPA. Business Advisor.
For closely-held Texas business

Subchapter V.
The reorganization built for closely-held Texas business.

Subchapter V is the streamlined Chapter 11 track Congress created for closely-held businesses — designed to be faster, less expensive, and structurally friendlier to the existing owner than traditional Chapter 11. For most viable Texas businesses carrying one bad piece of debt, it is the right tool.

Discuss a possible Subchapter V matter (972) 712-1515
Signed by the PartnerBy Darryl V. PrattManaging Partner
8 min read
Reviewed February 2026
Bankruptcy & Restructuring
01

Speed

Most plans are confirmed in 90 days. Traditional Chapter 11 commonly runs 12–18 months.

02

Cost

No creditors' committee. Far less litigation. Total professional fees are typically a fraction of a classic Chapter 11.

03

Control

The owner remains in possession. The absolute-priority rule does not bar the equity holder from retaining the business.

04

Trustee as facilitator

A Subchapter V Trustee is appointed — not to displace management, but to facilitate confirmation. A meaningful procedural advantage.

When this is the right tool

When Subchapter V is the right tool

  • Your business is fundamentally viable — the cash-flow problem is one specific liability, not a broken operating model.
  • Your aggregate non-contingent liquidated debt is under the current Subchapter V eligibility cap (approximately $3.4 million as of 2026, subject to inflation adjustments and periodic Congressional revision).
  • You want to remain in business and retain ownership.
  • You have the runway to fund a 3-to-5-year plan from disposable income or restructured debt service.
  • You have already exhausted — or seriously considered — workout and out-of-court restructuring options.
When it is not

When Subchapter V is not the right tool

  • The business is not viable on any reasonable forward forecast — Chapter 7 may be the more disciplined path.
  • Aggregate debt exceeds the Subchapter V cap — traditional Chapter 11 or an out-of-court restructuring is required.
  • The problem can be solved with a creditor workout — file as a last resort, not a first.
The Decision Matrix

Subchapter V vs. the alternatives

Dimension
Subchapter V
This page
Classic Chapter 11
Chapter 7 (Business)
Out-of-Court Workout
Typical timeline~90 days to confirmation12–18+ months60–120 days to discharge30–90 days
Total professional costModerateHighModerateLow
Owner keeps the business?Yes — typicallySometimes (subject to absolute priority)No — business is liquidatedYes
Creditors' committee?NoYesN/ANo
Public filing?YesYesYesNo
Debt cap?~$3.4M (current)NoneNoneNone
Best when…Business is viable but over-leveredLarge, complex, multi-creditorBusiness has no forward pathCreditors will negotiate voluntarily
The Process

The process — what 90 days actually looks like

I

Pre-filing strategy

Eligibility analysis, cash-flow projections, plan-feasibility modeling, creditor mapping. Most of the work that determines outcome happens here.

II

Petition & first-day motions

Voluntary petition filed. First-day orders to maintain operations, payroll, and cash collateral usage.

III

Status conference & trustee appointment

Court holds a Subchapter V status conference within 60 days. Subchapter V Trustee is appointed as facilitator.

IV

Plan filing

Debtor files the plan within 90 days of the petition. Plan is the operating blueprint for 3–5 years.

V

Confirmation

Court confirms the plan — consensually if creditors agree, or by cramdown if the fair-and-equitable standard is met. Confirmation is the inflection point.

VI

Plan performance

Debtor performs under the plan. Most matters discharge upon completion (3–5 years).

Common Questions

Frequently
asked.

Direct answers to the questions we are asked most often about this matter.

All firm FAQs
01What is the current Subchapter V debt cap?+
The Subchapter V eligibility cap is the maximum aggregate non-contingent liquidated debt a debtor may carry to qualify. The temporary $7.5 million cap created by the CARES Act and subsequent extensions expired in June 2024, returning the cap to the statutory baseline — approximately $3.4 million as of 2026, subject to inflation adjustments and periodic Congressional revision. Lone Star Counsel verifies eligibility against the cap in force on the date of filing as the first item of any Subchapter V engagement.
02How long does a Subchapter V case typically take?+
By statute, the debtor must file the plan within 90 days of the petition. Most Subchapter V cases reach confirmation within four to six months of filing — a fraction of the 12-to-18-month timeline that traditional Chapter 11 ordinarily requires. Plan performance then runs three to five years, after which most matters discharge.
03Is Subchapter V right for my Texas medical or professional practice?+
Often, yes. Closely-held physician, dental, veterinary, and other professional practices frequently sit squarely within the Subchapter V profile — viable operating model, manageable debt, owner who wants to keep practicing. The combination of attorney-and-CPA counsel matters more here than in most engagements: practice receivables, payor-mix projections, and the interaction of professional-entity rules with bankruptcy treatment all require both lenses. We handle these matters routinely from our Frisco, Sugar Land, and The Woodlands offices.
04Do I need a CPA and a bankruptcy lawyer — or can one firm do both?+
Most clients facing meaningful restructuring need both disciplines: a bankruptcy attorney to handle the legal process, and a CPA to handle the tax treatment of debt forgiveness, the means test, plan feasibility projections, and post-confirmation reporting. Lone Star Counsel is one of the few Texas firms whose principal — Darryl V. Pratt — is dually licensed as a Texas attorney and a Certified Public Accountant. One firm, both credentials, no hand-offs, no cross-charging, and a single coherent strategy from intake through discharge.
Related Restructuring Counsel

The other paths
we counsel on.

Restructuring · Chapter 11 · Reorganization
Chapter 11
The considered reorganization for the business that has outgrown the shortcuts.
Read
Restructuring · Chapter 7 · Business
Chapter 7 — Business
When the right answer is to close cleanly.
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Restructuring · Chapter 7 · Individual
Chapter 7 — Individual
A fresh start, with an attorney and a CPA under one roof.
Read
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This page is general information about Texas restructuring counsel and does not constitute legal advice. Bankruptcy is a fact-specific matter; the right path depends on circumstances we cannot evaluate from a public webpage. Begin with a private conference.