News & Analysis as of

Small Business CARES Act Debtors

Locke Lord LLP

Too Much of a Good Thing: Congress Allows Increased Subchapter 5 Eligibility Level to Expire

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Over the past few years, one of the universally celebrated success stories in the bankruptcy and restructuring world has been Subchapter V of the Bankruptcy Code. Created by the Small Business Reorganization Act of 2019 (the...more

Levenfeld Pearlstein, LLC

Congress Considers Another Extension to the Subchapter V $7.5 Million Debt Limit

On February 19, 2020, Congress enacted the Small Business Reorganization Act (“SBRA”) to, among other things, streamline the chapter 11 bankruptcy process for a small business by creating subchapter V of the Bankruptcy Code....more

Lowenstein Sandler LLP

Senate’s Bankruptcy Threshold Adjustment and Technical Corrections Act Retains $7.5 Million Eligibility for Subchapter V Small...

The Small Business Reorganization Act (SBRA) went into effect on Feb. 19, 2020, creating Subchapter V of the Bankruptcy Code. Acknowledging that a bankruptcy proceeding is not “one size fits all” and that a Chapter 11...more

Levenfeld Pearlstein, LLC

Increase in Subchapter V Debt Limit Poised to be Made Permanent

On February 19, 2020, Congress enacted the Small Business Reorganization Act (“SBRA”) to, among other things, streamline the chapter 11 bankruptcy process for a small business. Under the SBRA, a “small business” was one with...more

Patterson Belknap Webb & Tyler LLP

Unqualified "Cares" Act Funds Can't Be Used To Pay Creditors

U.S. Bankruptcy Judge Craig A. Gargotta rejected a debtor’s attempt to use “CARES Act” funds, which it did not actually qualify for, to pay creditors in its chapter 11 case. BR Healthcare Solutions (the “Debtor”)...more

Epiq

The Future of Subchapter V: Navigating the Pandemic and Beyond

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Bankruptcy courts have had an increase in activity since the COVID-19 pandemic struck, especially for small businesses facing financial challenges. The Small Business Reorganization Act (SBRA), which was passed in August 2019...more

Bradley Arant Boult Cummings LLP

A Business Bankruptcy Overview: How Subchapter V, the CARES Act and the Consolidated Appropriations Act Have Expanded Relief for...

In February 2020, just prior to the COVID-19 outbreak, the Small Business Reorganization Act of 2019 (Subchapter V) took effect. Subchapter V amends Chapter 11 of the Bankruptcy Code to allow certain individuals and...more

Foley Hoag LLP

PPP Loans and Small Business Debtors in Bankruptcy

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After the Paycheck Protection Program (the "PPP") was established in The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, debtors in bankruptcy cases applied for PPP loans. The...more

Kerr Russell

Increased Bankruptcy Debt Ceiling Set To Expire

Kerr Russell on

In February 2020, Congress established a new subchapter of Chapter 11 of the Bankruptcy Code aimed at easing the burden and costs of reorganization for small businesses. This new Subchapter V, enacted under the Small Business...more

Bradley Arant Boult Cummings LLP

Bradley’s Bankruptcy Basics: Chapter 11 Bankruptcy

Chapter 11 bankruptcy cases are most frequently filed by businesses. However, certain high-earning individuals whose debts are above the statutory debt limits to qualify for Chapter 13 can also file for Chapter 11 relief. In...more

Skadden, Arps, Slate, Meagher & Flom LLP

Uptick in Restructurings May Outlast COVID-19 Pandemic

The COVID-19 pandemic has caused massive disruption across the globe, resulting in a significant uptick in U.S. restructuring activity. According to AACER, a database of U.S. bankruptcy statistics, an estimated 7,128 business...more

Bowditch & Dewey

Rent Abatement, PPP Loans (Maybe), and Other Bankruptcy Relief in the Appropriations Act

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On December 27, 2020, the Consolidated Appropriations Act, 2021 became law. In addition to funding the government and providing coronavirus relief, the Act contains several intriguing amendments to the Bankruptcy Code. The...more

Pillsbury Winthrop Shaw Pittman LLP

Bankruptcy Code Amendments Aimed at Allowing Extended Rent Holidays for Small Business Debtors Pose More Questions Than They...

While the recent Bankruptcy Code amendments allow small business debtors to extend their deferral of lease obligations beyond the first 60 days of the bankruptcy case, the amendments raise and leave unanswered important...more

Miller Canfield

Congress Permits SBA to Make PPP Loans to Debtors in Bankruptcy, SBA Says "No"

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In June and December of 2020, Miller Canfield reported that the Fifth and Eleventh Circuits had held that the Small Business Administration ("SBA") may exclude debtors in bankruptcy from consideration for Paycheck Protection...more

Fox Rothschild LLP

Retention Of Counsel By Trustee Is Not An Absolute Right In Some Chapter 11 Cases

Fox Rothschild LLP on

How can you be an effective trustee appointed in a chapter 11 case if you cannot retain counsel when the case first begins? Well one bankruptcy court in North Carolina explained that a trustee’s retention of counsel is not an...more

Bradley Arant Boult Cummings LLP

Individual Chapter 11 Cases Under New Subchapter V

IN BRIEF - • The current economic decline caused by the COVID-19 pandemic will result in a surge of debtors in need of bankruptcy protection. • Subchapter V to the rescue! Despite some burdens on debtors, the advantages...more

Nelson Mullins Riley & Scarborough LLP

The Small Business Reorganization Act: An Unintended Lifeline For Small Businesses Considering Restructuring Due to COVID-19

For years, small business debtors have struggled with the intricacies of Chapter 11, the debt limitations of Chapter 13 and Chapter 7 bankruptcy liquidations. Stringent requirements and procedural hurdles often made...more

Bradley Arant Boult Cummings LLP

The Pros and Cons of the Small Business Reorganization Act of 2019

Effective February 19, 2020, Congress enacted new bankruptcy legislation granting debtors the option to elect a new subchapter V of chapter 11 of the bankruptcy code (Subchapter V). This was made possible by the bipartisan...more

Miller Canfield

Bankruptcy Rulings: Debtors Do Not Have to Be Currently Engaged in Business and Commercial Activities to Qualify for SBRA Relief

Miller Canfield on

The recently enacted Small Business Reorganization Act ("SBRA") is available to help "small business debtors" with debts of no more than $2,725,625 (temporarily increased to $7,500,000 for one year by the CARES Act). Although...more

Morgan Lewis

Debtors Need Not Apply? Continuing Developments on the SBA’s Authority to Deny PPP Loans to Debtor Applicants

Morgan Lewis on

The Small Business Administration on April 24 issued an update to an interim final rule, crystalizing its view that applicants that have sought protection under the US Bankruptcy Code are not qualified borrowers under the...more

Robinson & Cole LLP

Distressed Investors' Unexpected Tool: Understanding the Small Business Reorganization Act and Changes Related to the CARES Act

Robinson & Cole LLP on

In what seems like in the blink of an eye, a once robust economy quickly evaporated, leaving many small businesses with little to no revenue and depleted cash reserves. While many businesses are facing financial distress, the...more

Fox Rothschild LLP

The 90 day Franchise Bankruptcy Solution

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The CARES Act has amended the Bankruptcy Code to provide an expedited and easier version of a business bankruptcy proceeding. We now have “Subchapter 5” for small business and individual debtors. This process fulfills a sweet...more

Spilman Thomas & Battle, PLLC

Subchapter V and the Single Asset Real Estate Debtor in a COVID-19 World

Over a year ago, Congress amended the Bankruptcy Code to create Subchapter V, with the intent of encouraging small businesses (defined as those with less than $2,725,625.00 in debt) to file reorganization plans more often by...more

Sands Anderson PC

The New Small Business Reorganization Act Comes with New Forms and Rules

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Congress recently enacted the Small Business Reorganization Act of 2019 (the “SBRA”), which created Subchapter V of the Bankruptcy Code, and became effective on February 19, 2020. The SBRA was enacted to expedite and reduce...more

Cole Schotz

COVID-19 Legislation Makes Reorganization Quicker And Less Expensive For Small Business Debtors

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Chapter 11 for the Smaller Guys. Until very recently, filing for Chapter 11 reorganization was a tool for larger businesses since the process is expensive and time consuming while the Debtor corporation seeks to negotiate...more

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