Small Business Bankruptcy Assistance

What Are Your Options for Small Business Bankruptcy in Florida?

Commercial bankruptcy filings reached 31,810 nationally in 2025, a 5% increase over 2024, with Chapter 11 filings totaling 7,940 (American Bankruptcy Institute, 2025). If your Jacksonville business is struggling with debt, you’re not alone — and bankruptcy law provides several paths depending on your business structure, debt levels, and goals.

The four chapters most relevant to small businesses are Chapter 7, Chapter 11, Chapter 13, and the relatively new Subchapter V of Chapter 11. Each works differently. Choosing the wrong one wastes time and money; choosing the right one can save your business or give you a clean start.

Chapter 7: Liquidation for Businesses That Need to Close

Chapter 7 bankruptcy is a liquidation — the business ceases operations, a court-appointed trustee sells the assets, and the proceeds are distributed to creditors. The remaining qualifying debts are discharged.

Chapter 7 is appropriate when:

• The business has no realistic path to profitability
• You want to close the business and eliminate its debts
• The cost of reorganization would exceed the value of keeping the business running

Who can file: Sole proprietorships, partnerships, LLCs, and corporations. For sole proprietors, personal and business debts are combined in the same filing. For entities like LLCs and corporations, the business files separately — but note that business entities don’t receive a discharge in Chapter 7. The debts are eliminated by dissolving the entity, but any personal guarantees remain.

In my practice, I often advise sole proprietors to explore Chapter 7 when the business debts significantly exceed the value of the assets and continuing operations would only deepen the losses.

Chapter 11: Reorganization for Larger or More Complex Businesses

Traditional Chapter 11 allows a business to continue operating while restructuring its debts under a court-approved reorganization plan. Leases and contracts can be renegotiated, rejected, or assumed. The business proposes a plan to pay creditors over time while maintaining operations.

Chapter 11 is powerful but expensive. It typically involves:

• A creditors’ committee with its own attorneys (paid by the debtor)
• Detailed disclosure statements and plan confirmation hearings
• Quarterly U.S. Trustee fees throughout the case
• Legal fees that often run $25,000 to $100,000+ for small businesses

Who can file: Any business entity — LLCs, corporations, partnerships. This is the only option (besides Subchapter V) for non-sole-proprietor businesses that want to continue operating through bankruptcy.

Subchapter V: The Small Business Game-Changer

Created by the Small Business Reorganization Act of 2019, Subchapter V is a streamlined version of Chapter 11 specifically designed for small businesses. It’s faster, less expensive, and far more practical for most Jacksonville small business owners than traditional Chapter 11.

Current eligibility: Your total business debts (secured and unsecured combined) must not exceed $3,024,725, and at least 50% of those debts must arise from business activities (U.S. Courts, 2025).

Why Subchapter V Is Different

• No creditors’ committee — eliminates one of the biggest expenses of traditional Chapter 11
• The owner stays in control — no outside trustee takes over operations (though a Subchapter V trustee is appointed to facilitate the plan)
• Faster timeline — the plan must be filed within 90 days of filing
• No disclosure statement required — reduces paperwork and legal costs
• Cramdown without an accepting class — the court can confirm a plan over creditor objections as long as it’s fair and the debtor commits projected disposable income for 3-5 years

In practice, Subchapter V has been a genuine game-changer for small businesses in Jacksonville. Before it existed, many small business owners couldn’t afford a traditional Chapter 11 and had no option to reorganize. Subchapter V fills that gap.

Chapter 13: Restructuring for Sole Proprietors

Chapter 13 bankruptcy is available only to individuals, which includes sole proprietors whose business and personal finances are intertwined. It allows you to keep your assets while repaying debts over a 3- to 5-year plan.

Current debt limits (effective April 1, 2025 through March 31, 2028):

• Unsecured debt: $526,700
• Secured debt: $1,580,125

(Nolo, 2025)

Who can file: Sole proprietors only. Partnerships, LLCs, and corporations are not eligible for Chapter 13. If your debts exceed these limits, Subchapter V or traditional Chapter 11 may be the better path.

Which Chapter Is Right for Your Jacksonville Business?

The right choice depends on your business structure, debt levels, and whether you want to continue operating or close down:

Frequently Asked Questions

Can my LLC file for bankruptcy in Florida?

Yes. An LLC can file for Chapter 7 (liquidation), traditional Chapter 11 (reorganization), or Subchapter V (streamlined reorganization for debts under $3,024,725). LLCs cannot file Chapter 13 — that’s available only to individuals. If you’re the sole member of an LLC, you can file a personal Chapter 13 that addresses your personal liability, but the LLC itself would need a separate filing.

What is Subchapter V bankruptcy and who qualifies?

Subchapter V is a streamlined version of Chapter 11 created in 2019 specifically for small businesses. To qualify, your total business debts must not exceed $3,024,725 and at least 50% must come from business activity. It’s faster and cheaper than traditional Chapter 11 because there’s no creditors’ committee, no disclosure statement requirement, and the plan must be filed within 90 days.

What are the current Chapter 13 debt limits?

As of April 1, 2025, Chapter 13 debt limits are $526,700 in unsecured debt and $1,580,125 in secured debt. These limits apply through March 31, 2028. Only individuals (including sole proprietors) can file Chapter 13 — business entities like LLCs and corporations are not eligible.

Will I lose my business if I file for bankruptcy?

Not necessarily. Under Chapter 11, Subchapter V, and Chapter 13, you can continue operating your business while restructuring debts. Only Chapter 7 results in liquidation and closure. The right chapter depends on your business structure, debt levels, and whether the business can generate enough income to fund a repayment plan.

How much does a business bankruptcy attorney cost in Jacksonville?

Attorney fees vary by chapter and complexity. A Chapter 7 business liquidation typically costs $2,000-$5,000 in legal fees. Chapter 13 runs $3,000-$8,000 (often paid through the plan). Subchapter V costs $10,000-$25,000 depending on complexity. Traditional Chapter 11 can run $25,000-$100,000 or more. Court filing fees are separate.

Get Experienced Bankruptcy Guidance for Your Jacksonville Business

Business bankruptcy is complex, and the stakes are high — your livelihood, your employees, and your personal liability are all on the line. Choosing the wrong chapter, missing a filing deadline, or failing to properly value assets can turn a manageable situation into a disaster.

At The Law Offices of Sacks & Sacks, P.A., bankruptcy attorney Melanie Sacks has guided Jacksonville business owners through Chapter 7 liquidations, Chapter 11 reorganizations, Subchapter V filings, and Chapter 13 restructurings for over two decades. We offer a free consultation to evaluate your business’s financial situation and recommend the right path forward.

Call us at (904) 396-5557 or fill out the form to get started.

Related: Jacksonville Chapter 7 Bankruptcy | Jacksonville Chapter 13 Bankruptcy | Business Bankruptcy