File a Subchapter V case, and a trustee is appointed in every one. Here’s what surprises most business owners: the trustee doesn’t take over your company, you keep running it. The trustee’s job is to help you reach a confirmed plan, not to push you out.
Who Qualifies for Subchapter V in 2026
Subchapter V exists for smaller businesses that cannot absorb the cost of a traditional Chapter 11 bankruptcy. To be eligible, your total unsecured, liquidated debt must be less than $3,424,000 adjusted for inflation as of April 1, 2026. At least half of this debt must come from business activities.
What the Subchapter V Trustee Actually Does
The trustee’s duties are derived from 11 U.S.C. § 1183. Consider the trustee to be a neutral facilitator, rather than a boss.
- Facilitating a consensus plan. The primary responsibility is to assist you and your creditors in reaching an agreement that everyone can accept.
- Monitoring the case. They review your finances and ensure that the restructuring is progressing as planned.
- Investigating if the court requires it – examining your conduct and financial situation if a problem arises.
- Attending key hearings regarding the plan, valuation, and other significant decisions.
In many plans, the trustee also handles distributions, collects your payments and passes them along to creditors.
Why You Stay in Control
Under Subchapter V, you will remain the debtor-in-possession. You will retain the customer relationships, staff, and operational knowledge that keeps the doors open. There are several features that make this path much easier than a traditional Chapter 11 case:
- There is no creditors’ committee draining your assets with fees.
- There are no U.S. trustee quarterly fees.
- You will not be subject to the absolute priority rule, so you can maintain ownership even if not all creditors are paid in full.
- Your plan can be approved without a single creditor vote, as long as it is fair and equitable.
However, there is a tradeoff in speed. You only have 90 days to submit your reorganization plan. Extensions are available, but they are not automatic.
The Trustee Is Not Your Adversary, But They Aren’t Your Lawyer Either
It’s tempting to treat a cooperative trustee as your advocate. They are not. Courts describe the Subchapter V trustee as an “honest broker” who answers to the process, not to you. A trustee can support your plan and still flag missed reports or financial problems to the court. That is why you need your own counsel to protect your interests.
Talk to a Milwaukee Bankruptcy Attorney About Subchapter V
Subchapter V can help you cut debt, keep your business going, and finish in months rather than years, but only if you file correctly and meet the 90-day deadline. The lawyers at Kerkman & Dunn will tell you whether your debts fall under the 2026 limit, create a plan that the trustee will support, and keep you driving the process. If your business is struggling financially, map out your options before the creditor makes a decision for you. Contact Kerkman & Dunn to start the conversation.
