We’re happy to let our small business neighbors know that Congress passed new Chapter 11 bankruptcy rules. These changes can have a huge impact on your ability to file bankruptcy. The Small Business Reorganization Act adds a new Subchapter V to Chapter 11 bankruptcies, and those who qualify for these new rules will have a faster, more affordable bankruptcy option. Congress designed this to benefit small businesses who would like to reorganize their debt and continue to operate. At Rank & Karnes Law, P.C. we can help you determine if these new rules can help you and your business, and guide you through this streamlined process. Schedule a free consultation with us if you have questions, just by calling 503-385-8888.
A less expensive, streamlined bankruptcy process for your business.
In the past, small businesses owners struggling to stay afloat had only two vastly different bankruptcy options – Chapter 7 and Chapter 11. Filing Chapter 7 bankruptcy is a much faster, simpler process but does not typically allow a business owner to retain all of their assets and continue operations. Chapter 11 bankruptcy is designed for reorganizing a business and allowing it to continue running. But it has always required a lengthy and very expensive processes of oversight, confirmation, committees and disclosure statements. This process has been so onerous for small businesses that it is difficult to survive the process and stay afloat. The Small Business Reorganization Act (SBRA) adds Subchapter V and allows for a bankruptcy option that lies somewhere between Chapter 7 and Chapter 11.
There are a number of huge changes to the Chapter 11 process. For example, qualifying small businesses will no longer always be required to have a committee of creditors and pay for the the committee’s professionals. Instead a trustee will be appointed, much like a Chapter 13 bankruptcy trustee. This new subchapter also relaxes the confirmation process and eliminates the disclosure statement. This eases some of the most contentious and time consuming aspects of Chapter 11 filings. All of these changes greatly reduce the burden of Chapter 11 bankruptcy for businesses that qualify.
Will your business qualify for the new Chapter 11 bankruptcy rules?
Typically, the new SBRA rules will apply to eligible business owners who meet the definition “small business debtor”. This means, “a person or entity engaged in commercial or business activity with an aggregate liability below $2,725,625.” However, the CARES Act actually raises this threshold for businesses affected by the COVID-19 Pandemic and subsequent closures. Which means if your business is in trouble after this turbulent year, these new rules could help you turn things around. Subchapter V will be able to help more businesses than ever before, and we are here to help you find out if you’re eligible.
We can help you through the entire Chapter 11 bankruptcy process. Help you keep your business afloat and help you succeed now and in the future. We’re happy to have more tools in our box that can get you back on your feet. To find out if your business can benefit from these changes or learn about other options, please schedule a free bankruptcy consultation with us. We can go over these new rules in detail and review your case on the phone or in person. Just call 503-385-8888.