New Chapter 11 Bankruptcy Amendment to Come in February 2020
The Small Business Reorganization Act became law on August 23, 2019, upon signature from the President of the United States, Donald J. Trump. The new law helps small businesses by making amending the Chapter 11 bankruptcy process to remove its costly aspects such as disclosure statements and make it simpler for small business debtors.
The Small Business Reorganization Act (H.R. 3311)
The Small Business Reorganization Act of 2019 is an improvement to Chapter 11 of the US Bankruptcy Code that will go into effect on February 19, 2020. The reform includes changes to Subchapter V. Some of its provisions include:
- Small business debtors with debts not more than $2,725,625 can get relief
- A trustee must be appointed to oversee the Chapter 11 bankruptcy matter
- Unsecured creditors committee can only be appointed by order of the court
- The court must hold a status conference 60 days after the filing of the petition
- That the reorganization plan be fair and equitable to be approved
- Only the debtor can file a reorganization plan within 90 days of initiating the bankruptcy
Essentially, the Act makes the bankruptcy process more efficient for small business debtors and closes a gap in the current bankruptcy laws. It removes some of the primary roadblocks that were responsible for keeping small businesses from reorganizing.
The requirements and rules of the new plan are more small business debtor friendly. Without reform, small business debtors would continue to struggle with the burdens of Chapter 11 and face liquidation.
The Provisions Are Similar to Chapter 13
The provisions resulting from the Small Business Reorganization Act are similar to Chapter 13 Bankruptcy. For instance, a trustee is now required in every Chapter 11 bankruptcy.
Am I A Small Business Debtor?
According to the U.S. Bankruptcy Code, you or your business entity is a small business debtor if you have no more than $2,725,000 of noncontingent liquidated secured and unsecured debt. Keep in mind that 50% of the debt must have originated from business or commercial activities.
To opt in and use the Subchapter V option and apply the Small Business Reorganization Act to your case, you must select Subchapter V when filing your Chapter 11 bankruptcy case. This is the only way the new law will apply to your case.
Do You Have Questions about Subchapter V of the Bankruptcy Code and How it Can Apply to Your Chapter 11? Call Our West Palm Beach Chapter 11 Attorneys
Sometimes filing Chapter 11 bankruptcy is your only option. However, you do not have to go through the process alone. The new Small Business Reorganization Act has several benefits for you as a small business debtor. For more information and understanding on the new law that will go into effect in February 2020, contact the West Palm Beach chapter 11 bankruptcy attorneys at Kelley Kaplan & Eller at 561-264-6850 for a consultation. We are here to help you find the right solution for your business financial problems, so don’t hesitate to contact us for help getting back on your feet.