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Rewinery was an innovative company that promised to delivery inexpensive bottles of wine within an hour. The wine would delivered by a bike courier for a modest fee. When researching the demise of Rewinery, Steven Hoffman stated in his book, Make Elephants Fly, that he believe the challenge with Rewinery is that it’s expensive to deliver wines on demand, and if they appeal to the low end market, they unfortunately can’t make a profit. So, as someone who enjoys wine, I have wondered whether Refinery had to face demise. Maybt not. Enter the world of the Chapter 11 Subchapter 5 bankruptcy.

Understanding Chapter 11 Subchapter 5 Bankruptcy

The Small Business Reorganization Act of 2019 (SBRA) created the new of subchapter 5 of Chapter 11 Bankruptcy which became effective on February 19, 2020. The Subchapter 5 was created o help small business reorganize in a more efficient way. The process can also be quicker and more cost effective.

You may want to check out our more detailed subchapter 5 article, but here are 6 things you need to know:

  1. There are eligibility requirements. At least one half of the debtor’s liabilities must originate from business activities.
  2. You must have less than $2,725,625 in non-contingent debt. This amount will increase to $7,500,000 under the CARES Act.
  3. The Subchapter 5 plan can extend for three to five years
  4. Trustees are appointed in Subchapter 5 cases. Here is the list Chapter 11 Subchapter V trustees.
  5. Subchapter 5 can protects mall business owners personal assets
  6. Subchapter 5 is more fast paced than a traditional Chapter 11 bankruptcy.

Chapter 11 Subchapter 5 Bankruptcy Process

Chapter 11 Subchapter 5 bankruptcy process is unique, so let’s go through each step in the process. Please note that there are key differences between the Chapter 11 Subchapter 5 and Chapter 11 bankruptcy process.

  1. Does your company qualify for a Chapter 11 Subchapter 5?
  2. Decide whether you will hires an attorney who specializes in Chapter 11 bankruptcy.
  3. Prepare and file bankruptcy forms and petition
  4. You will be assigned a Chapter 11 Subchapter 5 bankruptcy trustee
  5. You will attend the initial debtor interview, 341 meet of creditors and status conference
  6. File Chapter 11 Bankruptcy Plan

Comparing Chapter 11 Subchapter 5 to Chapter 13 Bankruptcy

You may be reading about a repayment plan and wondering the differences between a Chapter 11 subchapter 5 and Chapter 13 bankruptcy. There are many differences between the two chapters of bankruptcy, so let’s go through them one by one.

Repayment Plans

Chapter 11 plans are often quite a bit more complicated than a Chapter 13 plan. Thankfully, the subchapter 5 plans are more streamlined than a Chapter 11 bankruptcy case. There are differences between how the administrative expenses are covered.

That said, there are similarities however between a Chapter 11 subchapter 5 and a Chapter 13 bankruptcy. In both plans, the debtor has the right to file a plan, which is slightly different than a Chapter 11 case. The subchapter 5 may also be three to five years.

Debt Limits

There are debt limits for both the Chapter 11 subchapter 5 and Chapter 13 bankruptcy. The 2020 Chapter 13 debt limit is $419,275 or less in unsecured debt and $1,257,850 or less in secured debts.

The Chapter 11 Subchapter 5 limits are much higher. The secured and unsecured debts must be $2,725,625 or less for a debtor to qualify for Subchapter V. That said,, the CARES Act increased the debt limit in Subchapter V to $7,500,000 effective through March 27, 2021. The increase is aimed to help those businesses affected by the COVID-19 outbreak.

Overall Costs

The overall cost of Chapter 13 bankruptcy is less than the cost of filing a Chapter 11 subchapter 5 case. The filing fee for a Chapter 11 subchapter 5 case is $1167 with an administrative fee of $550 and the cost of filing a Chapter 13 case is $235 plus an administrative fee of $75.

The ongoing costs for an attorney may be higher for a Chapter 11 subchapter 5. In a Chapter 13, the attorney may charge a fixed rate that is included in the plan. In a Chapter 11 subchapter 5, the attorney may charge hourly, so understanding this information is important when having an intialy consultation.


Rewinery has unfortunately closed its doors, but the question remains whether the Subchapter 5 could have provided the necessary assistance to keep its door open and allow us to continue to order wine on delivery.

Until we see the Subchapter 5 play out over the years, I guess we will find out soon enough.

Post Author: Ben Tejes

Ben Tejes is a co-founder and CEO of Ascend Finance. Before Ascend, Ben held various executive roles at personal finance companies. Ben specializes in Chapter 13 Bankruptcy, Debt Settlement, Chapter 7 Bankruptcy and debt payoff methods. In his free time, Ben enjoys spending time going on adventures with his wife and three young daughters.

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