Business Bankruptcy in Chicago: 5 Facts About the Northern District of Illinois

If you’re considering filing business bankruptcy, there are several options. The Northern District of Illinois has divisions in Chicago and Rockford. A company must hire a lawyer to file. A Chapter 7 gives no discharge to the corporation, but a Subchapter V has a debt limit and a 90-day plan deadline. And a local judge ruled even tiny plan payments lock a plan in place.

Filing Business Bankruptcy in the Chicago and Rockford Courts

The U.S. Bankruptcy Court for the Northern District of Illinois has two divisions. The Eastern Division, based in Chicago, covers Cook, DuPage, Grundy, Kane, Kendall, Lake, LaSalle, and Will Counties. The Western Division in Rockford covers ten counties including Boone, DeKalb, McHenry, and Winnebago. There’s a clerk line in Chicago at (312) 408-5000.

A key factor to filing business bankruptcy in the Chicago and Rockford courts is that you need a bankruptcy lawyer to do it. Every corporation and partnership that files for bankruptcy has to have a lawyer. Only individuals or “natural persons” may file pro se, without an attorney.

Can a business liquidate in bankruptcy and discharge its debts? Not really. A corporate Chapter 7 does not result in a discharge or forgiveness of debt like it does in an individual bankruptcy. Filing Chapter 7 costs $338. Chapter 11 costs a total of $1,738, of which $1,167 is the filing fee plus a $571 administrative fee.

A small business corporation can file a Subchapter V reorganization bankruptcy. It caps the debtor’s debt at $3,424,000. There’s a lot of buzz about raising it to $7.5 million. Congress passed this provision, but as of October 1, 2026, the president has not signed it. There are no quarterly fees paid to the U.S. Trustee. A trustee is always appointed. And you must file a proposed bankruptcy plan within 90 days of filing your case, though the court can sometimes extend it.

One aspect of business bankruptcy is the meeting of creditors called a Section 341 Meeting, after that part of the Bankruptcy Code. In the Eastern Division, a 341 meeting in a Chapter 11 case happens over the phone.

Substantial Consummation

In re National Tractor Parts is the name of a 2022 bankruptcy decision showing how small a payment it takes to lock in a subchapter V plan. This Illinois bankruptcy case was a Subchapter V reorganization of a company that sold heavy equipment and diesel engine parts. After negotiating with its creditors, the company had a confirmed bankruptcy plan that had a payment into the plan of $843 to one set of creditors and $585.20 to another. The U.S. Small Business Administration was owed money under the plan. It had not been paid anything yet. The company learned it could get a larger loan under the federal COVID-19 disaster relief program if it repaid its original SBA loan under its original terms. The company asked the court to move the SBA loan into a separate new class of creditors. The only opposition came from the U.S. Trustee. The bankruptcy judge ruled that even those tiny payments meant the Subchapter V plan was locked in and the company could not change it. The bankruptcy judge pointed to a feature of Subchapter V: once a consensual plan is substantially consummated, you may not modify the confirmed plan.

How did the bankruptcy judge figure that small payment locked in the whole plan? It can be found in the meaning of the word “substantial” in the law. “Substantial consummation” is found in 11 U.S.C. § 1101(2). Under Subchapter V, “substantial consummation” can be “the commencement of distribution” of plan funds. The company cited In re Dean Hardwoods, Inc., arguing its plan was not substantially consummated because some creditors had not yet received payments. The bankruptcy judge disagreed with how the company interpreted the law. In the court’s reading, there is no test for how substantial the payments are.

Another type of plan is the ”cram-down” plan. This is a plan confirmed over the creditors’ objections. The big difference between a consensual plan and a cram-down plan is that the latter allows you to modify the plan after it’s been confirmed, during the three-to-five-year payment plan.

As you draft your plan, think how the creditors will evaluate it. A plan needs to impress them as a feasible arrangement that also has some value for the company and for the creditors themselves. Talk with your attorney about every aspect of the plan before you pay anything, since a consensual plan locks in its terms once you pay. Keep the numbers conservative for what you expect to pay and to receive. If a plan is too optimistic, that is the usual reason it needs changing, and that can be difficult if it’s already locked in.