Subchapter V Confirmation Hearing Checklist: Financial Documents to Prepare

What the court requires at Subchapter V confirmation

A Subchapter V confirmation hearing financial documents checklist is the inventory of financial exhibits and schedules that the debtor must prepare before the hearing to demonstrate plan feasibility, creditor treatment, and compliance with the Bankruptcy Code. Subchapter V, added by the Small Business Reorganization Act of 2019, is available to debtors whose aggregate noncontingent liquidated debts fall under the statutory cap, which is $3,424,000 for cases filed on or after April 1, 2025.¹

The confirmation hearing is the single most consequential event in the case. The court must find that the plan satisfies the requirements of 11 U.S.C. § 1191, which incorporates most of § 1129(a), including feasibility under § 1129(a)(11), the best-interests test under § 1129(a)(7), and good faith under § 1129(a)(3). If the plan is confirmed without every impaired class accepting, § 1191(b) and (c) add the fair-and-equitable and disposable-income requirements.²

The financial documents submitted at the hearing are the evidentiary foundation for each of those findings. The core set typically includes the plan and its projections, the monthly operating reports for the entire case, a 13-week cash flow forecast, a liquidation analysis, profitability schedules, a projected-versus-actual revenue comparison, the debtor's personal financial statement where the debtor is an individual, and proof of post-confirmation working capital. Some courts publish their own confirmation checklists; the Northern District of Alabama's, for example, asks that the plan include a brief history of operations, a liquidation analysis, and projections.³

The 13-week cash flow the trustee expects to see

The 13-week cash flow is the primary tool the Subchapter V trustee and the U.S. Trustee use to judge whether the debtor can make the first plan payments. It projects weekly receipts and disbursements over the first thirteen weeks after confirmation and shows whether the debtor has the liquidity to fund the plan from the effective date.

A properly structured model includes beginning cash, weekly collections from receivables, disbursements by category (payroll, rent, utilities, professional fees, plan payments), and ending cash. It must reconcile to the bank statements and to the most recent monthly operating report. The assumptions behind each line should be documented; the collection rate on receivables, for example, should match the debtor's own history in the case.

Consider a hypothetical Sub V debtor with $3M in annual revenue and $200,000 in unsecured claims to be paid over 36 months. The model needs to show roughly $5,500 a month in free cash flow after operating expenses to fund those payments. If the model shows a negative week, counsel either adjusts the plan terms or presents a credible explanation for the shortfall.

The U.S. Trustee's objections here follow a pattern: collection assumptions the case history does not support, and known expenses left out. Quarterly tax deposits, insurance renewals, U.S. Trustee quarterly fees where they apply, and seasonal dips are the usual omissions. Update the model shortly before the hearing so it reflects the most recent actual results.

Three profitability schedules for plan feasibility

Feasibility requires a showing that confirmation is not likely to be followed by liquidation or the need for further reorganization.⁴ Three schedules carry that showing.

Gross profit margin schedule. Revenue less cost of goods sold, expressed as a percentage, compared with the debtor's pre-petition margins and, where available, industry benchmarks. A margin that drops well below history without an explanation raises feasibility concerns; a margin that suddenly improves raises different ones.

Operating expense schedule. SG&A by category (payroll, rent, utilities, marketing, insurance, professional fees), showing the pre-petition average, the average during the case, and the projected post-confirmation amount. Reductions that look aggressive, such as a large payroll cut with no explanation of how operations continue, draw scrutiny.

EBITDA and free cash flow schedule. Earnings before interest, taxes, depreciation, and amortization, less capital expenditures and debt service, arriving at the cash available for plan payments. If EBITDA is negative in any projected period, the schedule needs to show the recovery path.

Structuring the liquidation analysis

The best-interests test requires that each holder of an impaired claim receive at least as much under the plan as it would in a chapter 7 liquidation.² The liquidation analysis compares the two.

Assets are valued at what a chapter 7 trustee would realize, not at going-concern value; real estate, for example, is typically discounted for a forced sale. Chapter 7 administrative expenses are then estimated and deducted: the chapter 7 trustee's compensation, capped by 11 U.S.C. § 326(a) at 25 percent of the first $5,000 disbursed, 10 percent of the next $45,000, 5 percent of the amount from $50,000 to $1,000,000, and 3 percent above that; the trustee's professionals; and the costs of sale.⁵ What remains is the baseline creditors would receive in liquidation.

For a hypothetical Sub V debtor with $500,000 in assets and $300,000 in secured debt, the analysis might show $50,000 available for unsecured creditors after costs. If the plan pays unsecured creditors $80,000 over 36 months, the analysis demonstrates that creditors do better under the plan. Prepare the analysis as of a recent date; a stale analysis invites the question of what has changed.

Projected versus actual revenue

Courts and trustees compare the debtor's earlier projections to actual results as a test of whether the post-confirmation projections can be believed. The comparison typically runs from the petition date through the month before the hearing.

Present it as a table: projected revenue, actual revenue, variance in dollars, and variance as a percentage. If the debtor projected $250,000 a month and achieved $210,000, the 16 percent shortfall needs a written explanation. Acceptable explanations include a seasonal downturn that has since reversed, a lost customer that has been replaced, or a one-time disruption.

There is no fixed threshold in the Code. In practice, a double-digit variance without a written explanation invites questions, and a pattern of shortfalls is an argument that the plan's payments should be smaller or the term longer.

The actual figures come from the monthly operating reports filed under 11 U.S.C. § 308 and Rule 2015(a)(6).⁶ Confirm that every report is filed and that the numbers in the comparison match the reports before the hearing; a comparison that disagrees with the debtor's own filings is worse than none.

The individual debtor's personal financial statement

Where the debtor is an individual, the court and the trustee will want a current personal financial statement: assets, liabilities, income, and expenses. It serves two purposes, showing that the debtor is not holding back assets and showing that the debtor's personal expenses are reasonable.

List real estate, vehicles, bank accounts, retirement accounts, life insurance cash value, and personal property; on the liability side, mortgages, vehicle loans, credit cards, and personal guarantees of business debt. Monthly income and expenses should agree with the schedules and with the operating reports.

The U.S. Trustee reviews personal expenses for reasonableness, and in a nonconsensual case the disposable-income test under § 1191(d) makes the question direct. A debtor claiming $8,000 a month in personal expenses while proposing $2,000 a month to creditors should expect to justify each category.

Post-confirmation working capital and exit funding

The court must be satisfied that the debtor can operate after confirmation. That means proof of available cash, committed financing, or a credible projection of positive operating cash flow.

The proof usually takes the form of a bank statement showing current cash, a line-of-credit commitment letter, or a working capital schedule. How much is enough depends on the business: a retailer with fast inventory turnover may need a couple of weeks of expenses on hand, while a contractor paid on 60-day terms may need several months.

Present a sources-and-uses schedule for the first 90 days after confirmation, showing opening cash, projected collections, projected disbursements, and the minimum balance needed to avoid an overdraft. If a credit line is part of the answer, attach the commitment letter, and read it for conditions the debtor cannot meet and covenants the projections would breach.

Documenting good faith in the projections

Good faith under § 1129(a)(3) requires that the plan be proposed in good faith and not by any means forbidden by law. Applied to projections, it means the assumptions are reasonable, the method is sound, and the numbers were not shaped to reach confirmation.

Document it with a written narrative for each key assumption. Revenue projections cite historical trends, signed contracts, or letters of intent. Expense reductions cite vendor agreements, lease modifications, or staffing changes already made. If revenue grew 2 percent a year before the petition and the plan projects 15 percent, the narrative has to say why. If the debtor has never been profitable, projecting profit from the effective date needs the same treatment.

A short memorandum walking each confirmation requirement to the exhibit that supports it becomes part of the record and can pre-empt objections.

Your next step

Run the next confirmation hearing against this list. Identify anything missing, particularly the 13-week cash flow and a current liquidation analysis, and get it from the debtor well before the hearing. If you want the exhibits prepared or reviewed by someone who has built them before, contact us.