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 a structured inventory of financial exhibits and schedules that bankruptcy attorneys must prepare and verify before the confirmation hearing to demonstrate plan feasibility, creditor treatment, and compliance with the Bankruptcy Code. Subchapter V is a subchapter of Chapter 11 of the Bankruptcy Code created by the Small Business Reorganization Act of 2019 that provides a streamlined reorganization process for small business debtors with aggregate debts below $2,566,050.¹

The confirmation hearing is the single most consequential event in a Subchapter V case. Courts require the debtor to demonstrate that the plan satisfies all confirmation requirements under 11 U.S.C. § 1191, including feasibility, the best interest of creditors test, and good faith.¹

The financial documents submitted at this hearing serve as the evidentiary foundation for each requirement. The core document set typically includes the plan and disclosure statement, monthly operating reports (MORs) for the entire case, a 13-week cash flow forecast, a liquidation analysis, profitability schedules, projected versus actual revenue comparisons, the debtor's personal financial statement, and proof of post-confirmation working capital. Each document addresses a specific confirmation requirement, and missing any one item can trigger a continuance or objection.

Subchapter V filings grew from 1,118 in FY2020 to 2,647 in FY2024, a 137% increase, and filings rose 17% year-over-year in August 2025.²³ As case volume increases, courts and U.S. Trustees have developed more standardized expectations for confirmation exhibits. The Sub V confirmation checklist from the U.S. Bankruptcy Court for the Northern District of Alabama requires the plan to include a brief history of debtor operations, a liquidation analysis, and projections.⁴

The 13-Week Cash Flow Model the Trustee Expects to See

The 13-week cash flow model is the primary tool the trustee and U.S. Trustee use to assess whether the debtor can make plan payments. This model projects weekly cash inflows and outflows over the first 13 weeks after confirmation, showing the court that the debtor has sufficient liquidity to fund the plan.

A properly structured 13-week model includes beginning cash balance, weekly collections from accounts receivable, disbursements by category (payroll, rent, utilities, professional fees, plan payments), and ending cash balance. The model must reconcile to the debtor's bank statements and the most recent MOR. Courts expect the assumptions behind each line item to be documented — for example, the collection rate on receivables should match the debtor's historical average.

Consider a hypothetical Sub V debtor with $3M in annual revenue and $200,000 in unsecured debt to be paid over 36 months. The 13-week model would need to show that the debtor can generate approximately $5,500 per month in free cash flow after operating expenses to fund plan payments. If the model shows negative cash flow in any week, the attorney must either adjust the plan terms or present a credible explanation for the shortfall.

The U.S. Trustee frequently objects when the 13-week model uses unrealistic collection assumptions or omits known upcoming expenses. Common triggers include failing to include quarterly tax payments, insurance premium renewals, or seasonal revenue dips. The model should be updated within 14 days of the confirmation hearing to reflect the most recent actual results.

Three Critical Profitability Schedules for Plan Feasibility

Feasibility requires showing that the plan can be implemented with a reasonable probability of success over the plan term.⁵ Three profitability schedules provide the evidentiary basis for this showing.

Gross Profit Margin Schedule. This schedule shows revenue minus cost of goods sold, expressed as a percentage. For a retailer, this would include inventory costs, freight, and direct labor. The court compares the projected margin to the debtor's pre-petition margins and industry benchmarks. A margin that drops significantly below historical levels without explanation raises feasibility concerns.

Operating Expense Schedule. This schedule breaks down SG&A expenses by category: payroll, rent, utilities, marketing, insurance, and professional fees. Each line item should show the pre-petition average, the current case average, and the projected post-confirmation amount. The U.S. Trustee scrutinizes expense reductions that appear aggressive — for example, cutting payroll by 40% without showing how operations will continue.

EBITDA and Free Cash Flow Schedule. This schedule calculates earnings before interest, taxes, depreciation, and amortization, then subtracts capital expenditures and debt service to arrive at free cash flow available for plan payments. The court uses this schedule to determine whether the debtor can sustain payments over the full plan term. If EBITDA is negative in any projected period, the attorney must explain the recovery path.

How to Structure the Liquidation Analysis for Sub V

The best interest of creditors test requires that creditors receive at least as much under the plan as they would in a Chapter 7 liquidation.⁶ The liquidation analysis compares the value creditors would receive in a hypothetical Chapter 7 case to the value they receive under the plan.

Real estate is valued at a forced-sale discount — for example, a typical range might be 10% to 30% below fair market value. Administrative expenses in a hypothetical Chapter 7 must be estimated: trustee fees (25% of distributions up to $5,000, then 15% of amounts above), professional fees for the trustee's counsel, and costs of liquidating assets. The net proceeds available for creditors after these costs become the baseline.

For a hypothetical Sub V debtor with $500,000 in assets and $300,000 in secured debt, the liquidation analysis might show only $50,000 available for unsecured creditors after costs. If the plan proposes paying unsecured creditors, for example, $80,000 over 36 months, the analysis demonstrates that creditors receive more under the plan. The analysis must be updated as of a date within 30 days of the confirmation hearing.

Projected vs Actual Revenue: What the Court Compares

Courts compare the debtor's pre-confirmation revenue projections to actual results to assess the reliability of post-confirmation projections. This comparison typically covers the period from the petition date through the month before the confirmation hearing.

The comparison should be presented in a table showing projected revenue, actual revenue, variance in dollars, and variance as a percentage. For example, if a debtor projected $250,000 in monthly revenue but achieved only $210,000, the 16% variance requires explanation. Acceptable explanations include a seasonal downturn that has since reversed, a lost customer that has been replaced, or a one-time operational disruption.

The U.S. Trustee will object if the variance exceeds a typical threshold, such as 10%, without a credible explanation.⁶ Attorneys should prepare a written narrative for each material variance, citing specific events or market conditions. If the debtor's actual results consistently fall short of projections, the plan may need to be amended with lower payment amounts or a longer term.

Subchapter V debtors must maintain and file monthly operating reports within 21 days following the end of each monthly accounting period.⁷ These MORs provide the actual financial data used in the comparison. Attorneys should verify that all MORs are filed and accurate before the confirmation hearing.

The Debtor's Personal Financial Statement Requirements

For individual debtors in Subchapter V cases, the court requires a current personal financial statement. This document lists the debtor's personal assets, liabilities, income, and expenses, and it serves two purposes: demonstrating that the debtor is not hiding assets and showing that the debtor's personal expenses are reasonable.

The personal financial statement should include real estate, vehicles, bank accounts, retirement accounts, life insurance cash value, and personal property. Liabilities include mortgages, car loans, credit card debt, and personal guarantees on business debt. Monthly income and expenses should match the debtor's schedules and the MORs.

The U.S. Trustee reviews personal expenses for reasonableness. If the debtor claims, for example, $8,000 in monthly personal expenses while proposing to pay creditors $2,000 per month, the trustee may object on good faith grounds. The attorney should be prepared to justify each expense category or propose adjustments.

For a hypothetical debtor earning $120,000 annually from the business, a reasonable personal expense budget might include $3,000 for housing, $1,200 for food and transportation, $800 for insurance, and $500 for other expenses, totaling $5,500 per month. If the debtor's actual expenses exceed this level, the attorney should document the specific circumstances.

Post-Confirmation Working Capital and Exit Funding Proof

The court must be satisfied that the debtor has adequate working capital to operate after confirmation. This requires proof of available cash, committed financing, or a credible plan to generate sufficient liquidity.

Working capital proof typically takes the form of a bank statement showing the current cash balance, a line of credit commitment letter, or a detailed projection showing positive cash flow from operations. The amount of working capital needed depends on the debtor's industry and operating cycle. A retailer with high inventory turnover might need two weeks of operating expenses, while a contractor with 60-day payment terms might need three months.

The debtor should present a working capital schedule showing the source and use of funds for the first 90 days after confirmation. This schedule should include the opening cash balance, projected collections, projected disbursements, and the minimum cash balance required to avoid overdrafts.

If the debtor is using a line of credit for working capital, the commitment letter should be attached as an exhibit. The letter should confirm the lender's commitment to fund post-confirmation and should not contain conditions that the debtor cannot satisfy. Attorneys should verify the commitment letter's expiration date and any financial covenants.

Documenting Good Faith in Your Financial Projections

Good faith under 11 U.S.C. § 1129(a)(3) requires that the plan be proposed in good faith and not by any means forbidden by law. For financial projections, good faith means the assumptions are reasonable, the methodology is sound, and the debtor has not manipulated numbers to achieve confirmation.

Documenting good faith begins with a written narrative explaining each key assumption. For revenue projections, the narrative should cite historical trends, signed contracts, or letters of intent. For expense reductions, the narrative should reference vendor agreements, lease modifications, or staffing changes already implemented.

The U.S. Trustee examines whether projections are consistent with the debtor's MORs and historical financial statements. If the debtor's revenue grew 2% annually for three years before the petition, projecting 15% growth post-confirmation requires specific justification. Similarly, if the debtor has never achieved a positive net income, projecting profitability immediately after confirmation raises good faith concerns.

Attorneys should prepare a good faith memorandum that addresses each confirmation requirement and explains how the financial documents support it. This memorandum becomes part of the confirmation record and can preempt objections if it is thorough and well-reasoned.

Your Next Step

Review your next Subchapter V confirmation hearing against the checklist above. Identify any missing financial documents — particularly the 13-week cash flow model and updated liquidation analysis — and request them from the debtor at least 21 days before the hearing. If you need assistance preparing or reviewing these exhibits, contact [email protected].