There is a new tool for small businesses under the bankruptcy statutes. On August 23, 2019, President Trump signed into law the Small Business Reorganization Act of 2019 (“SBRA”), Pub. L. No. 116-54 (2019). And, since then Congress increased the cap to $7,500,000 for the next year as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act from $2,725,625.00.
This new bankruptcy tool under SBRA became effective on February 19, 2020
The SBRA provisions under Subchapter V are a subchapter of chapter 11 and not a new chapter of the Bankruptcy Code. The provisions are at 11 U.S. Code sections 1182 through 1195.
As a background, chapter 7 cases are liquidations for individuals or businesses, chapter 13 are organizations for individuals (not businesses) where the individual uses future income to pay creditors and chapter 11 are reorganizations or liquidations for individuals or businesses. Subchapter V is a blend of chapter 11 and chapter 13 with the goal to make it easier and cheaper for small businesses to reorganize. SBRA has the goal to simplify the reorganization process and reduce the cost of small business chapter 11 filings.
If you would like to discuss whether this new tool can help you get out of a financial crisis, Contact Our Office at (use phone number for location and a link to calendar for scheduling appointments- I’ll provide)
