The Small Business Reorganization Act Makes Bankruptcy Easier for Small Business Debtors
Filing bankruptcy, whether as an individual or small business, is a tough decision. For a small business, this means either shutting down the business operations or reorganizing under Chapter 11 bankruptcy. While bankruptcy is not an easy procedure, The Small Business Reorganization Act that goes into effect on February 19, 2020, makes the process a bit easier for small business debtors.
What Does the Small Business Reorganization Act (SBRA) Do?
The Small Business Reorganization Act of 2019 makes Chapter 11 bankruptcy easier on small business debtors by allowing them to reorganize their debts in such a way that avoids the difficulties that many businesses and small business owners experience prior to the Act.
The Act applies to small business debtors with secured and unsecured debt totaling no more than $2,725,625. Some of the highlights and changes of The Act include the following:
- The debtor is the only one that can file a reorganization plan
- There’s no creditor’s committee
- There’s no disclosure statement
- A trustee is appointed to facilitate the plan and make distributions
- Creditors votes are not needed to accept the plan
The new law helps small businesses by making Chapter 11 bankruptcy more affordable and favorable for small businesses and small business owners. It is a great way for small businesses and small business owners to get back on the right financial path and levels the playing field for all business types.
Prior to the Small Business Reorganization Act, Chapter 11 was more suited for and tailored to large corporations. Unlike most small businesses, large businesses could afford to pay the legal expenses of bankruptcy and still function as a corporation.
How Do I Know If I Am a Small Business Debtor?
Under the New Chapter 11 Bankruptcy Amendment and according to the U.S. Bankruptcy Code, you or your business entity is a small business debtor if you have no more than $2,725,625 of non-contingent liquidated secured and unsecured debt.
If this debt amount applies to you or your business, you may propose a debt reorganization plan under the Small Business Reorganization Act.
What Do I Need to Propose a Reorganization Plan?
To take advantage of the new bankruptcy amendment, any small business debtor must provide the most recent copies of the following financial records:
- Bank statements
- Balance sheets
- Cash flow statements
Filing a Chapter 11 bankruptcy under the new SBRA will allow a business owner to restructure the business debts with a plan of reorganization, remain in business, and pay creditors over a certain period of time.
Do You Have Questions about the New Bankruptcy Amendment and How It Can Apply to Your Small Business? Call Our West Palm Beach Chapter 11 Attorneys Today.
The new Small Business Reorganization Act has several benefits for small businesses and small business debtors. You do not have to continue to suffer in silence alone with your business’ financial struggles. For more information and understanding on the new law that will go into effect in February 19, 2020, contact the West Palm Beach bankruptcy attorneys at Kelley, Fulton & Kaplan at 561-264-6850 for a consultation.