Pending Federal Bill Could Open Subchapter V Bankruptcy to More Fort Worth Small Businesses

Small businesses in Fort Worth with up to $7.5 million in debt may soon qualify for Subchapter V, a streamlined form of Chapter 11 reorganization, under a bill awaiting President Trump's signature. The change, reported by The Dallas Morning News, would restore debt limits that expired in June 2024 and make them permanent, potentially altering the calculus for struggling business owners across Texas.

Currently, Subchapter V is available only to businesses with debts below approximately $3.4 million. The bill would increase that ceiling to $7.5 million, allowing more companies to use a process that lets owners keep operating while proposing a repayment plan without the expense of a full Chapter 11 case. For sole proprietors whose business debts are in their own names, the bill would also combine separate Chapter 13 caps for unsecured and secured debt into a single $2,750,000 limit. The new limits would apply only to cases filed on or after enactment.

Leinart Law Firm, a Fort Worth-based bankruptcy practice, advises business owners whose debts exceed the current limit to review their options now. "Subchapter V lets an owner keep running the business and propose a repayment plan without the expense of a full Chapter 11 case, but companies above the current limit cannot use it," said Marcus Leinart, founder of the firm. "We review the full debt picture with an owner, including personal guarantees, before recommending a chapter or a filing date."

For a business with debts between the two limits, waiting for the signature may make Subchapter V available, but delay carries risks. Creditor lawsuits, bank garnishments, and scheduled withdrawals under merchant cash advance agreements can deplete the cash a reorganization depends on. Owners who would rather close the business may use a Chapter 7 case, in which a trustee liquidates company assets. Owners can ask a bankruptcy lawyer whether a business qualifies today and how the pending change affects the timing of a filing.

The implications extend beyond individual companies. Subchapter V elections nationwide reached 302 in August, a 63 percent increase over August 2025, even under the lower limit, according to Epiq AACER data. The Northern District of Texas, which hears Fort Worth cases, ranks among the nation's busiest bankruptcy courts. Raising the debt ceiling could channel more of those filings into a faster, less costly process, helping preserve businesses, jobs, and local economic activity. For Texas, where small businesses form the backbone of the economy, the bill could mean fewer liquidations and more companies emerging from debt with operations intact.