6 Reasons Why Congress Should Allow Businesses With Up to $10 Million in Liabilities Reorganize Under Subchapter V

The Small Business Reorganization Act (“SBRA”) celebrates its second birthday in February 2022. “Subchapter V” – the SBRA’s pragmatic addition to chapter 11 – arrived just in time for the economic shock of the global COVID-19 pandemic. It has been a bright spot of activity in an otherwise sleepy bankruptcy system over the past 20 months. As of this writing, more than 2,600 businesses have elected to restructure under the new law: representing about 75% of small business chapter 11 cases filed since the start of 2020. The success rate of subchapter V cases is several times higher than standard chapter 11. About 2/3 of the confirmed plans are consensual with significant creditor support. And these cases are quick, with most businesses confirming plans within 6 months of filing (compared to 11 months in standard chapter 11). The unique provisions of Subchapter V allow debtors to build consensus, avoid protracted litigation, and quickly emerge from bankruptcy with a manageable debt load. >>READ MORE

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This article was co-published by Ciara Rogers of Oliver & Cheek, PLLC in addition to several other Subchapter V trustees.