Thomas Kearns Publishes Article in NYREJ on Subchapter V Bankruptcy Filings for Multi Property Real Estate

New York Real Estate Journal recently published an article authored by Co-Chair of Olshan’s Real Estate Law practice Thomas Kearns entitled “Subchapter V Bankruptcy Filings for Multi Property Real Estate.” (The article is also available on our blog.) In the article, Tom explains that the benefits of using bankruptcy laws to workout distressed real estate include the speed of bankruptcy courts as opposed to New York State courts at ordering properties sold and the efficacy of the statutory system in resolving all open claims. Tom draws particular attention to Subchapter V of the Bankruptcy Code, which was passed in 2019: “The core intent of Subchapter V is to allow for a more efficient reorganization process, enabling small businesses to negotiate with creditors, restructure debts, and continue operations with reduced disruption.” He explains that it “creates a new streamlined path that deserves attention from property owners and lenders involving workouts where more than one property is owned and liabilities don’t exceed $7.5 million.” “Subchapter V,” Tom continues, “specifically designed for small business debtors, simplifies the bankruptcy process, reducing costs and time. Importantly, Subchapter V is not available for single asset real estate debtors.” Since single asset debtors are not permitted to use Subchapter V, Tom cites two recent court decisions— In re Evergreen Site Holdings, Inc. and In re Nuovo Ciao-Di, LLC—to illustrate whether a particular business may or may not qualify. Tom concludes that “the use of Subchapter V small business bankruptcy filing holds potential for real estate ventures with multiple property holdings facing financial distress. As we navigate the complexities of the current real estate market, entrepreneurs should not overlook the bankruptcy tools at their disposal.”