On February 19, 2020 The Small Business Reorganization Act ("SBRA") went into effect which created a new subchapter to the United States Bankruptcy Code. The SBRA dramatically changed small business Chapter 11's by creating what is commonly known as Subchapter V.
Our firm is taking the lead in assisting small businesses and individuals. The Subchapter V goal is to reorganize faster and to reduce costs.
The debtor retains control of its business and the judge can confirm a fair and equitable plan.
This is great news especially with COVID-19 having a devastating financial impact on many small businesses.
In order to be eligible for Sub V a business must have less than $2,725,625.00 (subject to adjustment every three years).
Section 1113 of the CARES ACT increased the amount to $7,500,000.00 in March of 2020. The increased amount is applicable for one year from March 27, 2020.
Each Subchapter V case has a Subchapter V Trustee appointed to assist the debtor in obtaining a consensual plan with their creditors.
Sub V cases typically reorganize within 90 days from filing the bankruptcy case. Confirming cases quicker can keep costs down for struggling for small businesses.