The Small Business Reorganization Act of 2020 may be the silver lining in an otherwise stormy year for small businesses.
The Bankruptcy Abuse and Prevention Act of 2005 was created with the intention to curb the miss use of bankruptcy laws. As such, the Act required new paperwork and reporting requirements of businesses wanting to file for Chapter 11. The unintended fallout regarding the changes to Chapter 11 filing was now, in many cases, the process had become over complicated for small businesses.
Enter the Small Business Reorganization Act of 2020 and more importantly Subchapter V. The act, designed specifically to give small business owners the same benefits of Chapter 11, simply could not have arrived at a better time.
Unlike traditional Chapter 11 filings, Subchapter V allows the ownership of the business to remain with the business owner, as well as the majority of the day to day management decisions. No disclosure statement is required under Subchapter V. Also, filing fees can be spread out over the term of the reorganization plan and there is no requirement to pay U.S. Trustee fees quarterly.
Subchapter V is poised to allow small businesses who were hard hit by mandatory closures and minimum capacity orders during the COVID pandemic to regroup and recover.
Would you like to consult with a Bankruptcy Attorney to discuss your options under Chapter 11 or Subchapter V? Contact us today