It’s relatively easy for a small business to fall into debt. Whether it is a nationwide recession, local hard times or a business decision that didn’t pay off, “mom and pop” companies may find themselves at the mercy of creditors. Debt reorganization under Chapter 11 of the Bankruptcy Code has long been an option for businesses that want to stay open while reducing their debt to manageable levels, but it is normally complicated and expensive. Fortunately, the Small Business Reorganization Act of 2019 (SBRA) eases some of the normal requirements for small businesses who want to use this process. Gates Law Group, A Professional Corporation is ready to guide small businesses through this new, streamlined process.
The special SBRA procedures, known as Subchapter V, apply only to “small business debtors,” defined as persons or entities engaged in business or other commercial activities who owe a limited amount of unconditional debt, excluding debt owed to insiders, such as affiliates of the business or relatives of the owners. The debt limit, formerly $2,725,625, was raised to $7.5 million in 2020 as a part of legislation passed to address the coronavirus epidemic.
As a result of the SBRA, your small business case may avoid several difficult and costly aspects of other Chapter 11 cases. For example:
As a small business debtor, you must apply all of your projected disposable income to paying off creditors for the three to five years that the plan of reorganization is in effect. Overall, small business cases are substantially more likely to result in a successful Chapter 11 under the SBRA. If your small business is in need of reorganization, we can explain the requirements and advantages of the SBRA, file all of the necessary paperwork, seek the necessary court approval and guide you through the process.
Gates Law Group, A Professional Corporation represents local businesses in Chapter 11 bankruptcies brought under the Small Business Reorganization Act. Please call 559-432-9944 or contact us online to schedule a free initial consultation. We serve clients from our main office in Fresno and locations in Paso Robles and Visalia.