Subchapter V Debt Limit Increased to $7.5M Under New Law

Subchapter V Increased Debt Limit Signed Into Law

On November 10, 2026, President Donald J. Trump signed the Bankruptcy Threshold Adjustment Act into law, increasing the debt limit for eligibility under Subchapter V of Chapter 11 from $3,424,000.00 to $7.5 million, which applies only to cases commenced on or after November 10, 2026. This increase of the debt limit is distinct from prior adjustments in that there is no sunset date.

Expanding Access to Small Business Restructuring

The increased debt limit expands access to Subchapter V for small businesses facing financial distress. Subchapter V offers shorter plan deadlines, greater flexibility in negotiating restructuring plans, and relief from certain fees inherent in a traditional Chapter 11 case. These features can make restructuring more accessible to small businesses seeking to manage their debts and continue operating.

Next Steps for Distressed Businesses

Businesses previously excluded by the lower debt ceiling should reassess their restructuring options and consider whether the increased Subchapter V debt limit provides a practical path to addressing debt while preserving ongoing operations.