Originally published in the December 5, 2025, issue of AI’s Appraisal Now
Reprinted with permission from AI

A recent news report highlights that mom-and-pop business bankruptcies have climbed to record levels as debt burdens rise. The spike has pushed more small businesses into Subchapter V restructurings, where real estate often plays a central role in determining whether a reorganization plan can succeed.

According to Epiq Bankruptcy Analytics, more than 2,200 people and small firms filed for bankruptcy this year under Subchapter V rules.

For appraisers, this trend is creating both increased demand and heightened scrutiny. Subchapter V cases typically require current, defensible valuations under tight timelines, especially when owners seek to retain property while creditors push for relief from the automatic stay.

“Generally, real estate appraisers are hired by the mortgagee to show that the owner has no equity in an attempt to get the court to release the property from bankruptcy protection,” says Reginald Carter, MAI, SRA, of Jacksonville, Florida. “The business usually retains a business valuer to testify that there are intangible equity, but the business needs the real estate as part of the trustee-approved reorganization plan.”

As filings rise, appraisers should expect more assignments involving:

• As-is and as-stabilized valuations for distressed or highly leveraged properties
• Secured-claim valuations for cramdown scenarios
• Analysis of real property’s role in overall business viability
• Cross-examination readiness, as opposing experts frequently challenge assumptions

With Subchapter V cases accelerating, the appraisal profession’s role in bankruptcy decision-making is expanding, becoming more critical than ever.

For those appraisers seeking to engage in this type of appraisal service, Carter offers the following advice: "The modern legal landscape has become highly specialized. Gone are the days when a single general-practice attorney handled every type of legal issue. Whether they handle divorces, estate planning, eminent domain, bankruptcy, tax matters, or real estate litigation, they need appraisers who deliver credible, defensible results."