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The Small Business Reorganization Act

Helping NY’s Small Businesses Use Subchapter V of Chapter 11 Bankruptcy

Effective in February of 2020, the Small Business Reorganization Act (the “SBRA”) was created by Congress to provide small business owners with a more streamlined version of Chapter 11 bankruptcy. I have nearly 10 years of experience helping clients in White Plains and the surrounding areas overcome financial adversity, and I know how to help your small business regain control over its financial well-being.  I have helped small businesses in a wide variety of industries (e.g., real estate, health care, tech, software, transportation, and more), I can apply a thoughtful and meticulous approach to your unique financial situation and business model.

Ready to learn more about how the SBRA can help you with a Chapter 11 bankruptcy filing?

Call me at (914) 600-7161 to get started today.

Benefits of Chapter 11 Under the SBRA

Prior to the enactment of the SBRA, the Chapter 11 process could be extremely complex and overwhelming for small businesses, involving stringent standards, approval requirements by creditors, monthly reporting, and more. The SBRA added Subchapter V to Chapter 11 bankruptcy to combat some of the cumbersome requirements of a traditional chapter 11 bankruptcy and give small businesses a more straightforward opportunity to successfully reorganize.  For example, Subchapter V is exclusively available to small businesses with less than $2,725,625 of debt (at least 50% of which was accrued through commercial activities). The debt threshold for Subchapter V helps small businesses expedite the reorganization process and reduce the costs. 

The SBRA provides certain benefits to small business debtors, including:

  • Allowing equity holders to retain an interest in the business without paying creditors in full

  • Extending the time for debtors to pay administrative claims

  • Allowing the confirmation of a plan without creditor consent

  • Allowing the small business debtor to be the only one who can create a reorganization plan

  • Eliminating the requirement of a creditors’ committee (which is usually costly and time-consuming)

  • Providing the small business with a trustee whose main task is to ensure the development of a successful reorganization plan (rather than selling as many assets as possible)

  • Eliminating the “absolute priority” rule, which allowed plans to be denied unless unsecured creditors agreed to be paid less than what was owed

I urge you to take advantage of our free initial consultation so you can learn more about how the new law could allow you to reorganize and repay your debts under Chapter 11.

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