Gartland Thacker DelCotto PLLC Gartland Thacker DelCotto PLLC 2026-10-07T11:14:20Z https://www.dlgfirm.com/feed/atom/ WordPress /wp-content/uploads/sites/1101302/2026/02/cropped-New_logo_Fav-32x32.png On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[Bankruptcy Threshold Adjustment Act: Restoring a Vital Restructuring Path for Small Businesses]]> https://www.dlgfirm.com/?p=50596 2026-10-07T11:14:20Z 2026-10-07T11:08:37Z Congress Moves to Restore Broader Access to Subchapter V Bankruptcy Reorganization Congress has moved to restore broader access to a critical bankruptcy-reorganization option: Subchapter V of Chapter 11 for qualifying small businesses. The Bankruptcy Threshold Adjustment Act raises the Subchapter V debt ceiling to $7.5 million. For financially distressed business owners, entrepreneurs, and individuals, the legislation is consequential. Debt limits determine whether a debtor can use a more streamlined and practical restructuring process—or must instead consider a more costly traditional Chapter 11 case, liquidation, or nonbankruptcy alternatives. The Act is intended to provide durable access to the tools Congress designed for smaller enterprises and consumer debtors facing modern borrowing levels.

What the Act Changes

The Bankruptcy Threshold Adjustment Act responds to the 2024 expiration of temporary higher eligibility thresholds that had been in place for several years. During that period, many businesses and individuals were able to access more workable reorganization options. When the provisions sunset, eligibility narrowed substantially. The current legislative changes can be summarized as follows:
Bankruptcy Option Limit After June 2024 Sunset Limit Under the Act Key Effect
Subchapter V of Chapter 11 $3,424,000 in qualifying noncontingent, liquidated debt $7,500,000 Restores access to the small-business reorganization process for a substantially broader group of debtors
As of September 30, 2026, Congress has passed the legislation, and the measure is headed to the President for signature. Accordingly, practitioners and prospective debtors should confirm the final enactment date and effective-date language before relying on the revised limits in a filing strategy. However, an otherwise ineligible Subchapter V debtor may want to try and delay filing to become eligible under the higher limit, which seems imminent.

Why the Higher Limits Matter

Debt ceilings are not merely technical eligibility rules. They often determine whether a viable business can reorganize through an efficient statutory framework rather than undertake the expense and procedural complexity of a conventional Chapter 11 case. The original Small Business Reorganization Act of 2019 created Subchapter V to address a persistent problem in business bankruptcy: traditional Chapter 11 can be a difficult fit for a small or closely held company. A business may have a sound core operation, dedicated employees, a customer base, and assets worth preserving, but lack the liquidity necessary to fund a long, expensive reorganization proceeding. Subchapter V was designed to address that mismatch. The temporary $7.5 million ceiling recognized that many real-world small businesses—especially those with commercial real estate, equipment financing, inventory loans, COVID-era obligations, vendor debt, or personally guaranteed credit facilities—can quickly exceed a lower threshold without becoming “large” businesses in any practical sense. When the temporary threshold expired in 2024, the Subchapter V debt limit reverted to $3,424,000. That lower cap excluded businesses with debt levels that may be common among regional retailers, manufacturers, hospitality businesses, medical practices, construction companies, trucking operations, franchisees, agricultural enterprises, and commercial-property owners. The restored $7.5 million limit can therefore reopen a meaningful restructuring path for businesses that need it most.

Subchapter V’s Advantages for Small Businesses

Subchapter V is not a cure-all, and eligibility, feasibility, valuation, lien treatment, tax considerations, and litigation risk still require careful analysis. But for an eligible debtor, the process offers several important advantages over a standard Chapter 11 case.
  • A more efficient timetable. Subchapter V imposes shorter deadlines for filing a plan of reorganization, encouraging early assessment, focused negotiation, and movement toward a resolution. 
  • No creditors’ committee as a default requirement. In an ordinary Chapter 11 case, an official committee may be appointed, which can add administrative cost and complexity. Subchapter V generally avoids that layer unless a court orders otherwise.
  • No quarterly U.S. Trustee fees. Subchapter V debtors do not pay the quarterly fees otherwise imposed in Chapter 11 cases, an important cost-saving feature for businesses operating under significant financial pressure. 
  • A trustee focused on facilitation. The U.S. Trustee appoints a trustee in every Subchapter V case. Rather than displacing management as a Chapter 7 trustee typically would, the Subchapter V trustee works with the debtor and creditors to facilitate development of a consensual reorganization plan.
  • Greater plan-confirmation flexibility. In appropriate circumstances, a debtor may confirm a nonconsensual plan without satisfying the traditional Chapter 11 absolute-priority rule in the same way as a conventional small-business Chapter 11 debtor. Owners may have a more realistic opportunity to retain their equity interests if the plan commits projected disposable income over the applicable period and meets other confirmation requirements.
  • A better fit for owner-operated businesses. Many small businesses are inseparable from their owners’ expertise, relationships, licenses, labor, and day-to-day management. Subchapter V recognizes that preserving the operating business can create more value than a forced liquidation.
A simple example illustrates the impact. Consider a family-owned Kentucky manufacturer with $5.8 million in debt, including a secured equipment facility, a real-estate loan, trade debt, and obligations associated with a downturn in demand. The company may retain a profitable core business but need time to restructure payments, resolve vendor claims, and right-size operations. At the $3.424 million cap, the business would be excluded from Subchapter V. At $7.5 million, it may have access to a streamlined Chapter 11 path designed for precisely that type of business reorganization.

Experienced Counsel Matters

The availability of Subchapter V does not eliminate the need for deliberate planning. A successful case ordinarily begins well before the petition date: analyzing debt eligibility, reviewing liens and guaranties, assessing cash flow, identifying critical vendors, evaluating executory contracts and leases, developing credible financial projections, and framing a plan that can be confirmed. Gartland Thacker DelCotto PLLC, a Lexington-based boutique firm, brings extensive bankruptcy, restructuring, workout, litigation, and debtor-creditor experience to this analysis. Its attorneys, with a collective 100+ years of experience, have represented businesses in Subchapter V bankruptcies across multiple industries, including trucking, health care, pharmaceutical, roofing and construction, agricultural, specialty trade contractors, restaurant food service, and fitness. That range is important because a successful Subchapter V case must account for the business realities of a client’s industry, not simply the language of the Bankruptcy Code.

Planning for the Opportunity

The Bankruptcy Threshold Adjustment Act is a significant development for financially distressed small businesses and eligible consumer debtors. Its restored thresholds recognize that debt levels have changed and that reorganizing debtors need practical, cost-conscious tools to preserve value, jobs, assets, and ongoing operations. For small businesses with qualifying debt of up to $7.5 million, Subchapter V may offer a more accessible route to restructuring than a traditional Chapter 11 case. Every restructuring decision remains fact-specific. Timing, debt composition, cash flow, personal guaranties, real-estate exposure, tax issues, pending litigation, and lender relationships can all materially affect the appropriate strategy. Businesses and individuals considering bankruptcy should obtain tailored legal advice promptly—particularly as the final enactment and effective date of the new thresholds are confirmed. To learn more about Gartland Thacker DelCotto PLLC and set up a consultation, please call us at 859-231-5800 or visit us at www.gtdfirm.com for more information.]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[Protecting your personal assets when guaranteeing business debt]]> https://www.dlgfirm.com/?p=50589 2026-09-29T02:13:57Z 2026-10-01T12:55:37Z Understanding personal guarantees A personal guarantee is a legal promise to repay a business debt with your own money. Lenders, including merchant cash advance lenders, often require this before approving small business loans. Most business credit cards also include a personal guarantee by the signer. It gives creditors extra security, but it also puts your personal assets at risk.

How personal guarantees create risk

When a business cannot meet its loan obligations, the lender has the legal right to collect directly from you. This can mean wage garnishment, bank account garnishments, and even a lien on your home. These effects can last long after the business has closed.

Ways to limit your personal exposure

  • Request a limited guarantee before signing. This limits how much of the loan you are personally responsible for, rather than leaving your full personal wealth at risk.
  • When a business reorganizes, creditors can still pursue your personal assets directly. Make sure any reorganization also addresses your personal guarantee and exposure.
  • When a business closes, owners with personal guarantees often explore a personal bankruptcy filing to address the guarantee.

Taking steps to limit the risks of personal guarantees

Personal guarantees are serious financial commitments that extend beyond the life of a business. Understanding your current exposure and taking steps to limit future liability can help you protect your personal finances.]]> by Gartland Thacker DelCotto PLLC <![CDATA[Laura Day DelCotto, Michael Gartland, and Dean Langdon named to 2027 The Best Lawyers in America© List]]> https://www.dlgfirm.com/?p=50587 2026-08-24T04:15:10Z 2026-08-24T04:15:10Z As it enters its 23rd year of business, Gartland Thacker Delcotto PLLC is honored that three of its attorneys have received prestigious The Best Lawyers in America® awards for 2027. The firm founder, Laura Day DelCotto, was named the Best Lawyers® 2027 Bankruptcy Law "Lawyer of the Year" in Lexington, KY in the practice area of Creditor/Debtor Rights/Insolvency and Litigation-Bankruptcy. Also in the 33rd  Edition of The Best Lawyers in America®,  Michael J. Gartland was recognized in the practice area of Creditor/Debtor Rights/Insolvency and Reorganization Law.   Dean A. Langdon was named in The Best Lawyers in America© in the practice area of Creditor/Debtor Rights/Insolvency and Litigation-Bankruptcy. The 33rd edition recognizes 81,620 lawyers across 151 practice areas and 203 metropolitan and geographic areas, spanning 17,004 participating firms. Only about 5% of practicing attorneys in the market earn this distinction. This year's awardees were determined through 3.8 million evaluations submitted during the current cycle, adding to a cumulative total of more than 30 million historical evaluations, with more than 32,000 lawyers voting. Among this year's honorees, 4,915 also earned the additional "Lawyer of the Year" honor. "Lawyer of the Year" accolades are reserved for one individual per practice area in each metropolitan region, based on the highest aggregate peer feedback. This designation represents a rare and distinguished honor. No fees are accepted for consideration or inclusion, maintaining the integrity and independence of all recognitions. Our attorneys have been selected for The Best Lawyers in America© list since 2011. To learn more about Gartland Thacker DelCotto PLLC and its commitment to the lifetime success of its clients please visit  www.gtdfirm.com for more information. ]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[Options for restructuring a multigenerational Kentucky businesses]]> https://www.dlgfirm.com/?p=50585 2026-08-03T10:13:41Z 2026-08-06T10:13:00Z Running a long-standing family business in Kentucky is a profound labor of love. When the market shifts, changing your operational model may be essential for survival.  Restructuring a company can be complicated, but you have options to stabilize your finances and modernize your operations. Taking small but proactive steps is key to building a resilient foundation for the future of your business.

Phase 1: Financial triage and reality check

In many multigenerational stores, the lines between personal and business assets often blur. Conducting a comprehensive audit can help you tell your assets apart and determine which ones got mixed together over time. This makes it easier to manage your finances and stay compliant with taxes. If your business is seeing fewer customers, finding out the cause can help you decide whether you need to make small changes or rethink the business model entirely. From a cash-flow perspective, prioritizing payroll, withholding taxes and essential utilities can help you assess other nonurgent debts. Doing so helps keep your business running while reducing legal and tax risks.

Phase 2: Legal entity modernization

Many older Kentucky businesses operate as sole proprietorships or general partnerships. Restructuring can involve converting to a Limited Liability Company (LLC) to help protect your family’s homes and savings from business creditors. Additionally, creating or updating your Operating Agreement can better define roles for family members and prevent confusion during a crisis.

Phase 3: Debt and liability restructuring

In case you do not own your building, restructuring can include changing your current lease terms, as your landlord may prefer a modified rent schedule over a vacant storefront. Additionally, you may be able to work out payment plans with long-term suppliers by leveraging your family’s long history with them during negotiations. If you have past-due taxes with the Kentucky Department of Revenue, it is best to address them quickly, as state tax liens can seriously harm a legacy business.

Phase 4: Operational rightsizing

For many small businesses, payroll is likely the largest expense. You may need to consider shared work programs or layoffs to avoid wrongful termination or unemployment insurance spikes. To raise money for your business pivot, you can sell slow-moving stock through targeted clearance sales. Another option is to look for inexpensive ways to move your business online to better reach customers beyond your physical storefront.

Phase 5: Succession planning

When planning for the future, it is best to evaluate if your children have the desire or skill set to manage a restructured version of the store. If you cannot save the physical store, you can look into intellectual property strategies like trademarking your recipes for a future venture or a potential sale. You also have the option of filing for bankruptcy as a tool to keep your business operational while shedding unmanageable debt.

Protecting the legacy you built

Restructuring allows you to choose the terms of your business’s survival rather than letting creditors choose them for you. A lawyer can review your business records and debt obligations to help you choose the reorganization path that fits your needs.  ]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[How your business can turn bankruptcy into a strategic advantage]]> https://www.dlgfirm.com/?p=50578 2026-06-08T09:16:58Z 2026-06-08T09:11:59Z Misconceptions about bankruptcy Many people believe bankruptcy means total business failure and immediate closure. This is not entirely accurate. Bankruptcy is a legal tool that can help businesses manage heavy liabilities. In many cases, it can create a path toward long-term recovery. Chapter 11, including Subchapter V, bankruptcies are specifically structured to help businesses manage their finances without shutting down. It provides an opportunity to reorganize debt and build a sustainable financial plan. Through these pathways, many businesses are able to rebuild their credit over time.

Types of bankruptcy for businesses

The right bankruptcy option depends on your business structure and debt level. In Kentucky, you may file either of the following:
  • Chapter 11: This is designed primarily for corporations, partnerships and limited liability companies (LLC). It may also be available to individuals and sole proprietors.
  • Subchapter V: This is a streamlined version of Chapter 11 tailored specifically for small businesses with debts of $3,424,000 or less. It offers faster timelines and lower administrative costs.
Each type offers different levels of protection, cost and flexibility. With careful evaluation, you can identify the path that best supports long-term recovery.

How bankruptcy works

While each type of bankruptcy has unique features, the basic process involves similar steps. This includes:
  • Getting an automatic stay: Once you file for bankruptcy, an automatic stay immediately stops all collection activities, lawsuits and garnishments.
  • Continuing control: Under Chapter 11 and Subchapter V, current management typically stays in control of operations.
  • Creating a plan: The business proposes a reorganization or repayment plan that addresses creditor claims. This may involve adjusting payment terms, reducing debt amounts or extending timelines.
  • Approving the plan in court: The court reviews and approves the plan. Under Chapter 11, creditors vote on it. Creditor approval may not be required for Subchapter V.
With bankruptcy, the goal is to create a workable path forward.

Moving forward with the right bankruptcy strategy

Bankruptcy does not have to mean the end of the road. It can give businesses facing debt the tools to take control. Understanding which bankruptcy chapter fits your business goals is the first step toward developing a strategy that works for you.]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[3 steps to protect personal assets during business bankruptcy]]> https://www.dlgfirm.com/?p=50422 2026-02-26T15:41:54Z 2026-02-05T09:29:11Z Step 1: Create a business entity Your first step is to set up the right business structure. When you create a corporation or limited liability company (LLC), you build a legal wall between yourself and your business. This separation means creditors usually cannot go after what you own personally to pay business debts. However, this protection only works if you do it right. The structure you choose builds the foundation, but how you handle money each day decides if that protection stays strong.

Step 2: Separate personal and business finances

Once you set up your business entity, you must keep your money completely separate. Open bank accounts and credit cards just for your business. Never mix your personal spending with business transactions. Also, avoid signing personal guarantees for business loans when you can. When you mix your money together, you risk piercing the corporate veil, which breaks your legal protection. Beyond keeping clear money boundaries, you should also think about extra protection through insurance.

Step 3: Secure insurance protections

Special insurance plans offer another layer of protection for your personal wealth. Think about liability insurance, errors and omissions (E&O) coverage or umbrella policies that protect your assets from business claims. These policies can pay for legal costs and settlements that might otherwise put your personal finances at risk. With these protections in place, you can go through bankruptcy with more confidence.

Safeguard your financial future

Protecting your personal assets during business bankruptcy takes careful planning and professional help. A business bankruptcy attorney can help you understand complex laws and make sure you take every legal step to protect what matters most to you.]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[Merchant Cash Advances: A Lifeline or a Trap?]]> https://www.dlgfirm.com/?p=50395 2025-12-24T03:48:14Z 2025-12-26T13:24:21Z Merchant Cash Advances (MCA) provide fast cash for struggling businesses that often do not qualify for traditional bank loans. The company receives a lump sum now and pays it back through daily or weekly deductions over a short period of time, often at extremely high amounts and interest rates. Payments are based on a percentage of historical receipts.

The Potential Debt Trap

High costs and aggressive collection tactics often outweigh the initial benefits of quick capital. These agreements frequently hide extreme interest rates and exorbitant fees behind complex terminology and daily payment schedules.
  • The effective annual percentage rate often exceeds one hundred percent
  • Daily withdrawals may prevent the business from paying its employees or rent
  • Contract terms allow lenders to file legal actions in distant states
  • Confessions of judgment let lenders seize assets without a prior hearing
  • Often, the lender has already obtained a judgment and issued a garnishment before the company is aware of the out-of-state lawsuit
  • The owner of the company is most likely personally liable on the obligation as well
  • The lender has filed a lien against some or all of the company assets.
The constant drain on cash flow forces many owners into a cycle of stacking multiple advances. This pattern quickly leads to business failure and personal financial ruin for the owners.

Overcoming the obstacles of MCA lending

Our Firm has successfully helped companies resolve or make their MCA loan repayments more manageable, both in and out of court. This can be done through out-of-court settlements with the MCA lender, a wind-down of the company, or through the filing of bankruptcy. Please contact our Firm to see how we can help you with your MCA loans.  ]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[When the threat is inside: A guide to internal business fraud]]> https://www.dlgfirm.com/?p=50388 2025-10-09T09:20:02Z 2025-10-14T09:19:36Z First: Stop the bleeding and preserve the proof Your immediate priority is to prevent further losses. This means revoking the individual’s access to all company assets and systems. This includes changing passwords, removing them from bank accounts and securing access to the physical premises. It is equally important to preserve all potential evidence. The instinct may be to delete files or wipe computers in anger, but you must secure all documents, electronic records and communications. This evidence is vital for any future legal action.

Second: Understand the full scope of the damage

The fraud you initially discovered may only be the tip of the iceberg. Before you can decide on a course of action, you must understand the full extent of the financial harm. A thorough internal investigation, often with the help of a forensic accountant, is necessary. This will help you determine how the fraud was committed, how long it occurred and the total amount of the loss.

Third: Determine your path to recovery

Once you understand the situation, you can evaluate your options for legal recourse. Depending on the circumstances, this could involve filing a civil lawsuit to recover the stolen funds or making a claim on your business’s crime or fidelity insurance policy. You may also need to report the matter to law enforcement. If the fraud has created severe financial distress for your company, other restructuring options may be necessary.

Making a strategic, not emotional, decision

Discovering internal fraud is a business crisis that requires a calm, strategic response, not one driven by emotion. If you are facing this difficult challenge, consider speaking with an experienced attorney to explore your options for recovery and protect your business’s future.]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[Laura Day DelCotto, Michael Gartland, and Dean Langdon named to 2026 The Best Lawyers in America© List]]> https://www.dlgfirm.com/?p=50376 2025-08-28T05:10:31Z 2025-08-26T04:36:35Z nd year of business, Gartland Thacker DelCotto PLLC is honored that three of its attorneys have received prestigious The Best Lawyers in America awards. The firm owner and founder, Laura Day DelCotto, was named Best Lawyers 2026 Bankruptcy Lawyer of the Year in the 31st Edition of The Best Lawyers in America in the practice area of Litigation - Bankruptcy.   Michael J. Gartland was named in The Best Lawyers in America in the practice area of Creditor/Debtor Rights/Insolvency and Reorganization Law and Litigation – Bankruptcy.   Dean A. Langdon was named in The Best Lawyers in America© in the practice area of Creditor/Debtor Rights/Insolvency and Litigation-Bankruptcy. Best Lawyers is an elite global network of legal professionals recognized through trusted, peer-reviewed distinction.  For over four decades, its Purely Peer Review methodology has upheld the principle that recognition should be earned through the opinions of fellow attorneys, not marketing influence or paid listings. Each year, more than 13 million confidential evaluations are collected worldwide, contributing to one of the legal industry’s most rigorous and trusted vetting processes. Only about 5% of lawyers in the United States and 3% globally are recognized, reflecting the selectivity and credibility of the results. Proprietary safeguards are in place to reduce bias and uphold the accuracy of the peer feedback. For the 2026 edition of The Best Lawyers in America©, more than 26 million evaluations were analyzed. The Best Lawyers: Ones to Watch in America recognitions were determined based on more than 5.4 million evaluations. "Law Firm of the Year" awards are presented to a single firm in each practice area on a national scale. Selection is based on several criteria, including attorney feedback, firm size and presence, prior "Lawyer of the Year" honors, the number of lawyers recognized in the relevant practice area and supporting information submitted by the firms. "Lawyer of the Year" accolades are reserved for one individual per practice area in each metropolitan region, based on the highest aggregate peer feedback. This designation represents a rare and distinguished honor. No fees are accepted for consideration or inclusion, maintaining the integrity and independence of all recognitions. Our attorneys have been selected for The Best Lawyers in America© list since 2011. To learn more about [nap_names id="FIRM-NAME-1"] and its commitment to the lifetime success of its clients  please visit  www.dlgfirm.com for more information.]]> On Behalf of Gartland Thacker DelCotto PLLC <![CDATA[The impact of economic changes on small businesses]]> https://www.dlgfirm.com/?p=50371 2025-08-18T08:21:26Z 2025-08-21T08:20:39Z Supply chain challenges Economic changes often disrupt supply chains. Businesses may encounter higher costs for materials, longer delivery times or difficulty finding essential parts. This directly affects production schedules and profits.

Changing consumer habits

During recessions or times of inflation, people change how they spend money. They might focus on essential items, cut back on non-essentials or look for cheaper options. Businesses must study these changes to adjust what they offer and how they market.

Difficulty getting loans

When the economy slows, it can be harder for small businesses to get loans or credit lines. Less access to money can slow down growth plans or cause cash flow problems, making operations unstable.

Workforce adjustments

Economic changes impact the job market. Businesses might struggle to find and keep good employees, face pressure to increase wages, or need to rethink their staffing levels to match demand. Adapting how they manage their employees becomes very important.

Your path forward

For business owners facing tough financial times, knowing their choices is key. Looking into options like restructuring debt or talking with creditors can help them recover. Working with legal professionals who understand these complicated financial and legal matters provides a clear advantage, offering guidance and practical steps when times are tough.]]>