Sub-Chapter 5 Bankruptcy Attorneys in Palm Desert
The Small Business Reorganization Act
Although Chapter 11 of the U.S. Bankruptcy Code does contain provisions addressing small business debtors, many small businesses still struggle when filing for Chapter 11. Small businesses seeking debt relief through Chapter 11 often face high costs, procedural challenges, and other roadblocks along the way.
Effective February 20, 2020, the Small Business Reorganization Act (SBRA) adds a new sub-chapter 5 to Chapter 11 bankruptcy. The SBRA was created to facilitate the process and address the unique concerns of small business owners filing for bankruptcy.
At J. Doling Law, PC, we are already familiar with the SBRA and how it may affect our small business clients. Our Palm Desert SBRA bankruptcy attorney can help you navigate the process of filing for bankruptcy and obtaining debt relief as a small business owner.
Call (760) 412-5700 now to request a free consultation.
What the SBRA Does
When filing for Chapter 11 bankruptcy, small businesses can enjoy greater protection when the SRBA goes into effect. The Act applies to business owners with secured and unsecured debts valued at less than $2,725,625.
Additional provisions in the SBRA include:
- Appointing a trustee: The trustee appointed in your bankruptcy will not have a role in your business’s operations. Instead, their job is to ensure that you make the appropriate payments according to the terms of your reorganization plan and that they are disbursed properly.
- Streamlined reorganization processes: Small businesses will enjoy lower costs and less cumbersome procedures under the SBRA. They will not have to obtain approval to propose a reorganization plan or solicit votes to have one confirmed. There are also no unsecured creditors’ committees. A status conference will be held within 60 days of the petition date.
- Removing the “new value” rule: Under the SBRA, small business equity holders no longer have to provide “new value” tomaintain their equity interest in the debtor.
- Administrative expense claims: Small business debtors will not have to pay administrative expense claims as soon as the plan goes into effect. Instead, they can pay those claims throughout the duration of the plan.
- Residential mortgage modifications: The SBRA allows small business debtors to modify their residential mortgages under certain circumstances.
We encourage you to discuss your business’s financial concerns with our Chapter 5 SBRA attorney in Palm Desert. We can explain the ins and outs of the SBRA and help you navigate your bankruptcy with ease.
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