By: Tameria Driskill, Esq.
Do you have a small business that is struggling financially? If so, you may think bankruptcy is only for large corporations such as Toys R Us. However, a new provision has been added recently to the Bankruptcy Code to provide relief to small businesses without the high costs usually associated with a business reorganization filing.
The Small Business Reorganization Act of 2019 (“SBRA”) allows an individual, partnership or corporation with aggregate liabilities not exceeding $2,725,625.00, and with at least 50% of that debt arising from business activities, to elect to proceed under the new provisions of the SBRA. Often, self-employed individuals have debt that exceeds the debt limits for a chapter 13 repayment case but those individuals cannot afford the administrative costs of a traditional chapter 11 business reorganization.
The SBRA allows the case to move quickly and efficiently, and encourages cooperation between the debtor and creditors in formulating a consensual plan of reorganization. A plan must be filed with 90 days of the case filing and the documents to be filed with the court are streamlined, reducing attorney time and fees.
The SBRA addresses real challenges faced by small business debtors, particularly those who may have refinanced their home or taken out a home equity line of credit to pay business debt. The goal of bankruptcy is to give a debtor a financial “fresh start”. If you would like to be unhampered by the stress and discouragement of debt, we can help.
