Business Bankruptcy in New Orleans: 5 Facts About the Eastern District of Louisiana

If your business is based in New Orleans and you’re ready for bankruptcy, you file in the U.S. Bankruptcy Court for the Eastern District of Louisiana. The court has jurisdiction in the city and also in 12 surrounding parishes, including Jefferson, St. Tammany and Terrebonne. The court hears its cases in New Orleans and Houma. Before your case gets going, it helps to know a few things about the court.

The U.S. Bankruptcy Code imposes what’s known as an ”automatic stay” on your debts when you file for bankruptcy. Most creditors will have to stop efforts to sue you or to attempt to collect. There are some exceptions that allow creditors to resume collections.

Two Kinds of Chapter 11 Bankruptcies

Chapter 11 involves a proposal by the debtor to reorganize and put its business on sounder footing. Filing Chapter 11 doesn’t mean the business will be “liquidated” or end. There are two kinds of Chapter 11 bankruptcies, so your first step is to decide which category your business falls into. If you want to file for Chapter 11 bankruptcy under Subchapter V, your debts can’t be worth more than $3,424,000 (since April 2025). Further, at least 50 percent of your debt generally must have been caused by your business activities. But if your business is too far in debt to qualify for a streamlined bankruptcy, you still might qualify to file for the traditional Chapter 11.

Subchapter V is different from other forms of Chapter 11 in several ways. Many provisions, such as eliminating the obligation to pay U.S. trustee fees, streamline the bankruptcy process. Filing a Chapter 11 case under Subchapter V often costs less than filing a traditional Chapter 11, and there’s less paperwork required. Some of the papers a Chapter 11 debtor needs to file are generally not required in a Subchapter V case, including a Chapter 11 disclosure statement. The speed that comes with the streamlined procedures also has a downside. You must be ready to file a reorganization plan within 90 days. This time limit can be extended in certain circumstances.

In a regular Chapter 11 bankruptcy, creditors can file a reorganization plan if the debtor fails to file one. That’s not the case in a Subchapter V. If your plan isn’t accepted, the court, and not the creditors, may approve the plan, as long as it follows the law. There is usually no creditors committee formed with the filing of the case, which also speeds things up.

When you file a regular Chapter 11 petition, you usually don’t require the appointment of a trustee, as you can remain in charge of your business. In a Subchapter V, there’s always a trustee appointed. They have traditional duties, and they also help to ”facilitate the development of a consensual plan.” Regardless of the trustee’s role, under a Subchapter V, your business ordinarily continues as usual for the duration of the case.

In a regular Chapter 11, if you’re the business owner, it can be hard to hold equity in your business under a new restructuring plan. In a Subchapter V, the owner can maintain equity in the business under certain circumstances. This is one of the big selling points of this kind of filing.

Filing Costs

If you want to file for Chapter 11, you can’t avoid filing costs. When you file a Subchapter V petition in New Orleans, there’s a $1,738 fee payable to the Bankruptcy Court. The filing fee for a Chapter 7 bankruptcy is $338. You cannot pay by credit card or by personal check. Any check or money order must name “Clerk, U.S. Bankruptcy Court.” The New Orleans branch of the U.S. Bankruptcy Court is at 500 Poydras St., Suite B-601. It helps to know about business hours. The clerk’s office opens every weekday, Monday to Friday, from 8:30 a.m. to 4:30 p.m.

You also can’t just pick anyone to represent you. According to the court’s rules, your lawyer must be admitted to the Eastern District of Louisiana court. If your lawyer works in another state, they may appear on your behalf by filing a motion with the court. In such a situation, your lawyer must be in good standing with their jurisdiction.

There is usually a creditors meeting in a bankruptcy called a ”341 meeting.” In the New Orleans court, these meetings are now held via telephone in Chapter 11 cases. In a Subchapter V case, the call-in details appear in section 7 of the case notice. Chapter 7 meetings continue to be held remotely via Zoom.

Weigh the Pros and Cons

Should you file for a Subchapter V or a traditional Chapter 11? It’s essential to weigh the pros and cons before making a decision. If you own a relatively small business and your debts are manageable, filing for Chapter 11 bankruptcy under Subchapter V could work for you. These cases are often faster to resolve and less complicated. But your financial situation may dictate that you go the regular Chapter 11 route. Just because you qualify for a Subchapter V doesn’t mean it’s the right move. The big variables are how much you owe, how much of your debt is secured by collateral, your ownership structure, real estate, litigation, affiliated companies, and your goals.

If you decide a Subchapter V may suit your needs, make sure your filing meets the $3,424,000 debt limit and the requirement that at least half of your debts generally must be business-related. Also confirm you’ve retained the necessary admitted counsel. Be aware of the scheduling requirements that can be much tighter than in a normal Chapter 11 bankruptcy.