On August 23, 2019, the Small Business Reorganization Act of 2019 was signed into law, creating a new Subchapter 5 of the United States Bankruptcy Code. The new law, which went into effect on February 19, 2020, is designed to streamline and expedite the debt restructuring process for small businesses which affirmatively elect to file bankruptcy under Subchapter 5.
While Subchapter 5, as initially enacted, set a requirement that a small business have debts of no greater than $2,725,625 (both secured and unsecured) in order to be eligible to file under Subchapter 5, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed into law on March 27, 2020, has substantially increased that debt threshold to $7.5 million. The CARES Act provides that that increase will remain in effect for one year.
Coupled with that amendment, key provisions of the Subchapter 5 law include the following:
Please contact members of our Bankruptcy & Restructuring Group to discuss any questions or for guidance regarding relief available to your business under the Bankruptcy Code.
|Markowitz, Scott S. Partner and Co-Chair of Bankruptcy and Corporate Restructuring Practice||Partner and Co-Chair of Bankruptcy and Corporate Restructuring Practice||212.216.8005|
|Spizz, Alex Partner and Co-Chair of Bankruptcy and Corporate Restructuring Practice||Partner and Co-Chair of Bankruptcy and Corporate Restructuring Practice||212.216.1155|
|Wolf, Robert A. Partner||Partner||212.216.1159|