Recent bankruptcy code amendments allow small businesses to reorganize under a special sub-chapter in response to coronavirus impacts
Effective February 2020, Congress has amended the Small Business Reorganization Act (SBRA) of 2019 in response to the widespread impacts of COVID-19 on small businesses. Now, small businesses may be able to reorganize under special Subchapter V of Chapter 11, without the restrictive eligibility requirements of Chapter 11.
Essentially, this makes it easier and faster for businesses to file for bankruptcy and reorganize. This subchapter may allow small businesses to work with payment plans over several years instead of paying in-full. Modifications may be made to mortgages for individuals who function and operate as a small business. Further, small businesses under this unique subchapter may appoint a trustee who can help facilitate the process, including tracking creditor payments.
However, currently small businesses with debts up to $7.5M don’t have a long time to act on these bankruptcy provisions. The debt eligibility threshold returns to $2.7M after a year.
Significantly, individuals are also eligible to reorganize under the small business provisions of Subchapter V, so long as their debt does not exceed the eligibility requirements. This new legislation passed in response to increases in the debt limit eligibility requirements. This will make many more businesses and individuals eligible for Subchapter V relief from the impacts of the coronavirus.
Jennis Law Firm is working to file numerous Subchapter V relief cases on behalf of small businesses businesses. We have experience with business and personal reorganization. We want to help you take advantage of the new legislative provisions and reorganize. Be sure to contact us today for more information about Subchapter V coronavirus relief.