Practice Updates

What Does the Small Business Reorganization Act of 2019 (SBRA) Mean for Small Businesses?

Chapter 11 bankruptcy is a successful tool for large corporations and individuals. However, Chapter 11 bankruptcy presents many hurdles for small businesses and sometimes proves too costly.  The Small Business Reorganization Act of 2019 is meant to remedy those issues and provides small businesses with a new tool to restructure. The new SBRA takes effect on February 19, 2020 and the debt limit for a small business engaged in commercial or business activity is $2,725,625.

Highlights of the SBRA include:

1. Small business owners will have 90 days to file a Chapter 11 reorganization plan;

2. It may be possible for small business owners to retain ownership of their business without repaying their debts in full;

3. Small business cases will be required to appoint a standing trustee who will oversee the bankruptcy case; and

4. No creditor’s committee will be appointed unless the Court orders otherwise.

The Small Business Reorganization Act should create a valuable path for small business to successfully reorganize. Wolfson Bolton stands ready to assist your business, large or small.

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