The Business Bankruptcy “Big 3” and the Unanticipated Benefits of Subchapter V

Authors

Marshall V. Ringwood

Abstract

The liberal bankruptcy venue rules in the United States have their defenders and advocates. Subchapter V of the Bankruptcy Code came into effect in 2020, justified as a bipartisan solution to a longstanding problem in corporate bankruptcy where restructuring under Chapter 11 was prohibitively expensive for small-business debtors. On June 21, 2024, Subchapter V’s extended debt limit of $7,500,000 in liabilities reverted back to a statutorily defined $3,024,725. In addition to the justifications offered by organizations such as the American Bankruptcy Institute (ABI) for both Subchapter V, generally, and a permanent increase to its debt limit, I argue that Subchapter V has unexpected benefits for the corporate bankruptcy system at large. Specifically, it could lead to (i) more widely distributed predictability and judicial expertise across districts; (ii) less concentration of filings by small to medium-sized debtors in the Big 3 jurisdictions (D. Del., S.D. Tex., and S.D.N.Y.), allowing those courts to more fully specialize in the most complex cases; and (iii) less concentration of Chapter 11 cases in the Big 3 in aggregate terms, even potentially for medium-sized and some large-sized debtors. Accordingly, I propose that Congress should adopt the ABI’s recommendation to make the $7,500,000 debt limit under Subchapter V permanent.

Rights

© 2026 Brigham Young University Law Review

Recommended Citation

Marshall V. Ringwood, The Business Bankruptcy “Big 3” and the Unanticipated Benefits of Subchapter V, 51 BYU L. Rev. 925 (2026).
Available at: https://digitalcommons.law.byu.edu/lawreview/vol51/iss3/14