Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
Filing bankruptcy for small businesses just got a whole lot easier! The Small Business Reorganization Act of 2019 takes effect on February 19, 2020. Some of the new features are that it adds a new subchapter V to Chapter 11 of the Bankruptcy Code which is good for small business bankruptcies because:
- There are no quarterly trustee fees;
- There is no absolute priority rule;
- Better communication between parties; and
- the Trustee and Debtor in Possession are allied.
Normally filing a Chapter 7 for a business is not warranted – a company doesn’t get a discharge anyway; and a Chapter 7 is process which simply allows for the ordinary dissolution of assets. However, it exposes the officers and directors to challenge for prior business decisions that is risky at times. A reorganization in a Chapter 11 can be a very expensive and cumbersome process. This new SBRA process may help fix a longstanding problem where small businesses could not historically obtain bankruptcy relief.
