Subchapter V and the story of Lisa’s Pizza

Part 1 of 4

Who can forget the events that shook the world in February and March 2020? We all knew it was coming, but none of us knew how to prepare. No one could predict how life changing it was going to be. And then it happened.

On Feb. 19, 2020, the Small Business Reorganization Act went into effect. This Act created a new subchapter to Chapter 11 (i.e., the “reorganization” chapter) of the bankruptcy code. That subchapter is known as subchapter V, and this is the story of how a (somewhat) fictional business used subchapter V to combat its financial distress. This is the story of Lisa’s Pizza.

First, let’s review some basics. The “debtor” is the main character in any bankruptcy. The folks that are owed money are the debtor’s “creditors.” There are two main objectives when a debtor files for bankruptcy. It either wants to liquidate or reorganize. If the debtor wants to liquidate, it will typically file a chapter 7 case. Upon the filing of a chapter 7 case, a chapter 7 estate is created, and a chapter 7 trustee gets appointed. The debtor’s assets will now be controlled by the estate. The chapter 7 trustee’s job is to sell or otherwise monetize the assets and distribute the proceeds to the debtor’s creditors. Fortunately, Lisa’s Pizza does not need to liquidate. Instead, Lisa’s Pizza wants to reorganize.

Prior to February 19, 2020, Lisa’s Pizza only had one option to reorganize under the Bankruptcy Code. It had to use the same, very expensive process that large companies use. It had to make the same disclosures and incur court fees that debtors like General Motors and Stein Mart easily absorbed. In short, the chapter 11 process was unnecessarily complicated for a small company. Moreover, one could argue that small businesses were being denied access to the Bankruptcy process because it was cost prohibitive.

Bravo to Congress for recognizing this problem and creating subchapter V. The legislative intent was to “streamline the bankruptcy process by which small businesses debtors reorganize and rehabilitate their financial affairs.” As Rep. David Cicilline, D-R.I., aptly stated, “it is essential that our bankruptcy system does not punish entrepreneurship and investment by foreclosing opportunities for small business to financially reorganize.” After all, small businesses are the backbone of our economy. Without access to a system that protects the risk takers, capitalism suffers.

...is what keeps you and your business ahead

BY MIKE DAL LAGO Guest Columnist

Now, let’s talk about Lisa. Lisa’s passion was making good pizza and her dream was to own the finest pizza parlor in Naples. In 2017, Lisa decided to fulfill her dream and opens Lisa’s Pizza. She applies for, and receives, a small business loan in the amount of $250,000 from Nice Bank. Repayment of this loan is secured by a first lien on all assets, plus a personal guaranty from Lisa individually. She signs a fiveyear lease in Mercato and begins her dream. The economy is strong, and it turns out that Lisa indeed makes excellent pizza. The reviews are through the roof:

“The Best Pizza in Naples” – Tom Satten

“Line out the door” – Anonymous Yelp Review

“So popular, you can’t get in on Weekends” – Facebook post

Demand for Lisa’s Pizza is incredible. Unfortunately, however, Lisa’s location is so small that she cannot supply the demand. The dinning area and kitchen is simply too small. Lisa decides in 2019 that she can sustain a second location. Her dream is becoming true.

Mike Dal Lago is the founder and managing partner of Dal Lago Law, a leading Business Law and Business Bankruptcy law firm in Naples, with 22 years of experience in insolvency matters. Contact Mike@dallagolaw.com.

Cape Coral small business class taking applications

Individuals thinking about starting their own business who but need some mentoring are invited to apply for the Goodwill Southwest Florida MicroEnterprise Institute’s Cape Coral class, scheduled for May 15-June 22. Application are now being accepted, and class size is limited.

More than 500 local businesses have emerged from the MicroEnterprise Institute. This six-week small business development program helps low-to-moderate income emerging entrepreneurs start new ventures and grow small businesses.

Classes are scheduled from 6 p.m. to 9 p.m. on Monday and Thursday evenings on Nicholas Parkway East in Cape Coral. Graduates complete a comprehensive training course and prepare a solid plan to guide their start-up. They work with mentors who are successful businesspeople and hear from subject matter experts in areas of accounting, legal, marketing, insurance and funding. An easy-to-use workbook, used by organizations across America, assist in transforming vision into a plan for a successful business.

A recent program graduate said, “This course helped me to organize and plan out the steps for creating my business. Coming in, I had no idea how to start a business that would lead to success, and now I have that.”

To apply, visit www.goodwillswfl.org/microenterprise, or call (239) 995-2106 ext. 2215. The session is $80; Volunteer hours can be substituted for the fee if income requirements are met.

For more information, email Sandra Plazas at sandraplazas@ goodwillswfl.org.

Bin There Dump That recognized by Forbes

Bin There Dump That, a residential dumpster rental franchise company with locations in the U.S. and Canada, has been recognized by Forbes HOME as a Best Dumpster Rental Company for 2023. Local entrepreneurs Martin and Ann Wierengo are proud to be part of this success story.

Forbes Home Improvement editorial team commended “Bin There Dump That” for the “most thorough services included in a residential dumpster rental package, including driveway protection and sweep up after every job.”

Forbes Home “Why We Picked It” recommendation provides insight into their selection process. “Admittedly our choice for the best pun in its name, Bin There Dump That offers 21 years of industry experience to clients of its 124 franchise locations. Out of our top five picks, this company offers the most of what’s included in a rental: protective boards under the dumpster so it never touches a driveway, sweeping up after every job, next day or same day service, delivery and pickup (also available on Saturdays), Dumpster Consultants to detail

Entrepreneur Page 1

He then introduced Wil Glaser, president of LabX. Glaser moved to Naples 16 years ago and has several successful entrepreneurial enterprises under his belt. He explained the philosophy behind LabX. Whether budding entrepreneurs want to create and invest in their own ideas or nurture a concept while still holding down a job, Glaser is passionate about providing a welcoming experience for the individual innovator.

He shared that as he looked around Southwest Florida, he said to himself, “Why can’t we be an emergent technology hub, or why can’t we be known as a successful Silicon Valley?”

That has to come from talent, Glaser went on, and that talent, when it comes up with a new idea, needs to be fostered and not pushed aside. He noted, “It just takes one individual to go through and really change an entire economy.” He then shared, “When I met with John and Todd and Mr. Talmage, when we were everything you need to know about renting a dumpster and more.”

“The difference with our dumpster experience goes beyond ease of delivery in space-restricted neighborhoods and our clean, attractive containers,” said Mike Kernaghan, CEO of Bin There Dump That. “Our franchisees are local business owners, serving their local communities. Their focus is on providing the best solution and the best service to each customer, based on the customer’s project, property configuration, and budget.”

“Our franchise offers home and business owners a unique dumpster rental experience with an attention to detail which is not common in the dumpster rental industry,” say Martin and Ann Wierengo. “We want that final step in your cleanup or renovation project to be easy, convenient, and professional. It’s clear that our customer-focused approach works because our business continues to grow.” touring the lab, the question came up of ‘How can we be getting innovation more into this community?’ “ Glaser pointed out, “So if all we need is that one Bill Gates, that one Steve Jobs, that one Elon Musk, that can develop that company that is worth hundreds of billions of dollars, and more companies springing up, shouldn’t we be actively looking at these individuals within our own communities?”

Contact Bin There Dump That of Fort Myers at (239) 707-4919 or fortmyers@bintheredumpthat.com.

He continued, “What we need to be doing is creating a team that identifies these firebrands. I didn’t even know this word existed, but a firebrand is another word for a person who stands out, who feels very strong about an idea and will take risks to see it through.”

Glaser concluded, “It used to be that ‘It takes a village.’ And that still should be the case; to have that same mentality in that we want to wrap this individual with as much support and expertise as possible, because we want them to succeed, and they’re also going to be that much more passionate about this area.” So, inspired by Wil Glaser’s vision and leadership, could Southwest Florida be the next Silicon Valley?