Chapter 11 Subchapter V
Chapter 11

Chapter 11 Sub V. The Small Business Reorganization Act.

The Small Business Reorganization Act (SBRA) went into effect on February 19, 2020. A large part of Kosnett Law’s practice focuses on representing small business debtors under SBRA. SBRA is a new addition to the U.S. Bankruptcy Code and fills a much-needed gap for debtors caught between Chapter 11 and Chapter 13. SBRA is designed for small business debtors engaged in commercial activity with a debt limit of $2,725,625. This limit has currently been expanded under the CARES act to $7,500,000 for a period of one year following enactment. This amendment would only apply to Chapter 11 cases commenced after the enactment of the CARES Act. SBRA reduces many of the harsh deadlines and stresses put on small businesses who file under Chapter 11.

Effective February 19, 2020, the provisions governing small business debtors under Chapter 11 were amended by Congress by passing thee Small Business Debtor Reorganization Act of 2019. This amendment added provisions, included as subchapter V of Chapter 11, that are designed to provide a streamlined approach to reorganizing small business debtors.

Advantages using the new law for the Small Business Debtor are many.

  • The Plan is easier to confirm:
    • only the debtor can file the plan,
    • A Disclosure statement is not required,
    • a contested plan may be confirmed over the objection of creditors, and
    • the absolute priority rule does not apply.
  • There is no creditors committee. Unless the court orders otherwise, a creditors’ committee may not be appointed in a small business debtor case.
  • There is no quarterly U.S. Trustee payments. Small business debtors are not required to pay quarterly fees to the U.S. Trustee.

The SRBA provides much needed relief for Small Business to reorganize their debt and get back to business, especially post COVID.

The services offered by Kosnett Law firm may involve a recommendation to file for Bankruptcy relief under the United States Bankruptcy code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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