Congress created Subchapter V through the Small Business Reorganization Act of 2019 more than six years ago to give eligible small businesses a faster, more effective, and more affordable way to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The latest filing data suggest that these protections are increasingly important for struggling businesses. Specifically, small business Chapter 11 filings under “Subchapter V” of Chapter 11 increased 91 percent in February 2026 compared to the previous year, according to data from Epiq AACER.
According to Adam Prescott, Co-Chair of the Bankruptcy, Restructuring, and Insolvency Group, this significant year-over-year increase reflects the difficult economic environment many small businesses are facing.
“Small businesses continue to deal with the exhaustion of Covid relief funds, rising labor and material costs, higher borrowing costs, tariffs, shifting consumer demand, and broader economic and global uncertainty,” Adam explained. The decision for small businesses to attempt reorganizations through Chapter 11 also reflects the success of Subchapter V as an affordable option for struggling businesses to restructure their liabilities and preserve long-term equity value, as compared to a closure or liquidation. These small business Chapter 11 cases are completed in just a matter of months, while a traditional Chapter 11 case could linger for years. At the same time, these cases cost a fraction of the cost of a traditional Chapter 11 case due to multiple changes in the statute, including elimination of creditors committees and mandatory deadlines intended to move cases along.
If you are interested in learning more about whether Subchapter V can help your business, please reach out to Adam Prescott at (207) 228-7145 or [email protected].