Small Business Reorganization Act Deadline!

The Small Business Reorganization Act of 2019 (the “SBRA”) provides an expedited, simpler and less expensive route through chapter 11 of the Bankruptcy Code for small businesses. Plus, it preserves the owners’ equity interest in their company; even without paying creditors what they are owed.

Initially, to qualify as a small business the debtor could have no more than $2,725,625 of debt. Responding to the Coronavirus Pandemic, Congress passed the CARES Act. The CARES Act recognized the SBRA’s debt cap was unrealistic. So, the CARES Act increased the cap to $7, 500,000. However, this increase lasts only until March 27, 2021. 

Congress has yet to extend the increased cap beyond March 27, 2021.

The Pandemic severely injured many business and their owners. Chapter 11 provides a means of reorganizing and rehabilitating businesses and their owners. You or your business may be considering reorganizing through chapter 11, If the debt exceeds $2,725,625, you should confer with a bankruptcy professional immediately. Otherwise, you will probably lose a remarkable tool to preserve your business or yourself,

Remember, “Bankruptcy is a strategy for success.” If it can work for you, use it.