Three bankruptcy bills recently navigated the political morass in Washington D.C. and became law on August 23, 2019. The three new laws are:
- Small Business Reorganization Act of 2019 (H.R. 3311)
- Family Farmer Relief Act of 2019 (H.R. 2336)
- HAVEN Act (H.R. 2938).
On August 29, 2019, the American Bankruptcy Institute (“ABI”) sponsored its “ABI Media Webinar” (which appears below in YouTube) to discuss these three new laws.
Description and Outline
Here’s the ABI’s headline and advance description for the webinar (from this linked site):
Headline: Experts to Discuss New Bankruptcy Laws to Help Distressed Small Businesses, Disabled Veterans and Family Farmers on ABI Media Webinar.
Description: What are the key provisions of the new laws? How will these new laws help struggling small businesses, disabled veterans and family farmers going forward? ABI’s media webinar features experts who advocated for the passage of the legislation; they will provide an overview of each law and take questions.
The webinar follows this outline:
- Introduction (0:00 to 0:40)
- Moderator’s explanation (0:40 to 3:15)
- Discussion of the Small Business Reorganization Act (3:15 to 19:00)
- Discussion of the Family Farmer Relief Act (19:00 to 29:40)
- Discussion of the HAVEN Act (29:40 to 37:45)
- Questions and answers on all three laws (37:45 to 1:00:16).
I participated in discussion of the Family Farmer Relief Act (23:00 to 29:40) by responding to these questions:
- What is the likely impact of the new law — both short and long term?
- How does the new law change counseling to troubled farmers?
- What do you make of the ABA’s concern about the new law’s effect on access to and cost of credit?
We trust you’ll enjoy replaying this webinar!
Summary of the New Laws
Here is ABI’s summary of the three new laws (which appears at this linked site):
H.R. 3311, the “Small Business Reorganization Act of 2019” (SBRA), which will take effect in February 2020, adds a new subchapter V to chapter 11, providing a better path for small businesses to successfully restructure, reduce liquidations, save jobs and increase recoveries to creditors while recognizing the value provided by entrepreneurs. It adopts the current definition of a “small business debtor” as a person in commercial or business activity with aggregate or noncontingent liquidated secured and unsecured debts as of its bankruptcy filing date of not more than $2,725,625. It is estimated that about half the chapter 11 cases filed today could qualify for subchapter V treatment.
H.R. 2938, the “Honoring American Veterans in Extreme Need Act of 2019” (HAVEN Act), was introduced on May 23 in the House by Reps. Lucy McBath (D-Ga.) and Greg Steube (R-Fla.) to exclude VA and DoD disability payments from the monthly income calculation used for bankruptcy means testing. ABI Veterans Affairs Task Force Member Holly Petraeus, a former assistant director of the Consumer Financial Protection Bureau,testified in favor of the bill on behalf of the Task Force before the House Judiciary Committee. ABI’s Commission on Consumer Bankruptcy also endorsed the provision.
H.R. 2336, the “Family Farmer Relief Act of 2019 ,” was introduced on April 18 in the House by Rep. Antonio Delgado (D-N.Y.) to update chapter 12 of the U.S. Bankruptcy Code to reflect the economic challenges facing distressed farmers. The debt limit for chapter 12 filings had been $4.3 million; H.R. 2336 raises this limit to $10 million. Farm sizes have increased substantially since 1986; meanwhile, net farm income has declined since 2013. A survey released on Aug. 15 by the Federal Reserve Bank of Chicago found that Midwest bankers were reporting that the percentage of farm loans their customers are having problems repaying hit a 20-year high in the second quarter of this year.
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