Fixing Chapter 11 For Small Biz
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Law360, New York (March 12, 2021, 3:58 PM EST) --
On Feb. 19, 2020, Congress enacted the Small Business Reorganization Act to improve the Chapter 11 reorganization process for small business debtors. In this Expert Analysis series, bankruptcy experts reflect on ways the law has worked — and ways it hasn't — during the past year, a time of crisis for many small businesses.
What SBRA Means By 'Engaged'
As courts have split over the Small Business Reorganization Act's definition of "engaged in," the majority view — that a debtor need not be currently engaged in business for the act to apply and that an individual guarantor of a small business debtor may elect to use Subchapter V even if the small business is defunct — appears to be correct, say Brian Shaw and Christina Sanfelippo at
Cozen O'Connor.
SBRA Has Room For Improvement
While congressional attempts to aid small businesses struggling in the pandemic have focused primarily on the provision of additional capital through the Paycheck Protection Plan, Congress could provide greater relief to those businesses through revisions to the Small Business Reorganization Act, says Brook Gotberg at
Brigham Young University.
The SBRA Is Working As Intended
The Small Business Reorganization Act appears to be fulfilling its promise: Bankruptcy cases under the act are cheaper, more efficient and leading to more consensual reorganizations of eligible small businesses, say Robert Keach and Adam Prescott at
Bernstein Shur.
SBRA's Puzzling Preference Edit
The Small Business Reorganization Act's seemingly straightforward amendment to the Bankruptcy Code, attempting to streamline preference litigation by requiring the trustee to consider parties' reasonably known defenses, actually raises a host of questions regarding due diligence and implications for other bankruptcy provisions, say Joel Cohen at
Stout Risius Ross, and Robert Michaelson and Howard Magaliff at
Rich Michaelson Magaliff.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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