In the case of In re Vertical Mac Construction, LLC, No. 21-1520 (Bankr. M.D. Fla. July 23, 2021), Vertical Mac Construction, LLC (“Debtor”) ceased operating its business after several lawsuits were filed against it for shoddy construction. The Debtor’s insurance carrier defended the lawsuits, but afterwards, the Debtor was unable to renew its insurance and therefore decided to close the business. Shortly thereafter the Debtor filed a petition under Subchapter V of Chapter 11. The petition listed approximately $300,000 in assets, including a $13,000 bank account. Immediately after filing bankruptcy the Debtor filed a motion to sell assets under 11 U.S.C § 363. However, before the Court could rule on the motion to sell the United States Trustee (“UST”) objected to the Debtor’s Subchapter V bankruptcy filing. The UST contended that the Debtor was not eligible to proceed under Subchapter V because the Debtor no longer operated a business and therefore was not “engaged in commercial or business activities” as of the bankruptcy filing date. The UST concluded that the Debtor is merely using Subchapter V to liquidate assets and not to reorganize a business.
