Chapter 11, Subchapter V, trustee and creditor representation, receivership, and out-of-court workouts for businesses navigating the space where financial pressure meets legal exposure.
Patrick A. Foley began his legal career as lead counsel to the Chapter 7 Trustee in the national liquidation of a 70-plus-location franchise operation, a matter that required immediate command of operational wind-downs, lease negotiations, claims resolution, and the preservation of estate assets across multiple jurisdictions. That experience now anchors a practice built on navigating financial and legal complexity under pressure.
The firm represents small and mid-sized businesses in Chapter 11 reorganization, with particular attention to Subchapter V proceedings under the Small Business Reorganization Act. Subchapter V compressed the traditional Chapter 11 timeline and removed procedural obstacles that historically made full-scale Chapter 11 impractical for closely held companies. But it demands careful planning, cash flow projections that will hold up in court, and a credible reorganization narrative from day one. The firm advises debtors on strategy, prepares the filings, negotiates with creditors and the Subchapter V trustee, and carries the matter through plan confirmation.
Beyond debtor-side work, Patrick has represented Chapter 7 trustees in multi-state liquidations, creditor committees, and individual institutional creditors in adversary litigation, fraudulent transfer actions, and claims disputes. Representation often includes asset recovery across jurisdictions, preserving estate value through lease rejections and contract assumptions, and resolving priority disputes among competing creditors.
Not every financially distressed business needs to file. The firm structures private reorganizations, forbearance agreements, and debt workouts for businesses and high-net-worth individuals, often in coordination with secured lenders and strategic stakeholders. When matters escalate, the firm handles receivership work, including serving as receiver and acting as counsel to court-appointed receivers running or winding down a business.
When the numbers no longer work, the legal path matters more than the financial one. The question is rarely whether to file. It is which chapter, under which strategy, at which moment.
In most cases, yes. The business usually remains a “debtor in possession,” keeps its management in place, and continues to operate, subject to bankruptcy court oversight, monthly reporting, and court approval for transactions outside the ordinary course of business. A Subchapter V trustee is appointed to monitor the case and help the parties reach a plan, but does not ordinarily take over the business.
The Bankruptcy Code moves these cases quickly: the court holds an early status conference, and the debtor must file its plan within 90 days of filing unless the court extends that deadline. Many cases reach plan confirmation within several months, though contested cases take longer. After confirmation, plan payments typically run for three to five years.
Subchapter V is open to businesses, and to individuals engaged in business, whose debts are below a debt limit set by statute that has changed several times; ask us for the current figure. At least half of the debts must arise from business or commercial activity, and some debtors, such as certain public companies, are excluded.
Not necessarily. In a traditional Chapter 11 case, the “absolute priority rule” can make it difficult for owners to keep their equity over the objection of unpaid creditors. Subchapter V does not apply that rule in the same way, so owners may be able to keep the business if the plan commits the company’s projected disposable income to creditors for three to five years and otherwise meets the confirmation requirements.
Generally, no. A personal guarantee is a separate obligation of the person who signed it, and a business bankruptcy does not by itself discharge it. Guarantees are often addressed in the plan negotiations, in a separate agreement with the lender, or in a personal case, so they should be part of the strategy from the start.
No. Forbearance agreements, loan modifications, negotiated workouts, an orderly sale, or a state-court receivership can sometimes accomplish what a bankruptcy filing would, at lower cost and with less publicity. The right choice depends on the debts, the assets, the creditors involved, and how much time the business has.
These answers are general information about Michigan and federal law, not legal advice about your situation. Contacting the firm does not create an attorney-client relationship.
The firm handles new matters on a consultative basis. Call the office, or send us a message through our contact form.