By: Donald L Swanson Five different bankruptcy courts have allowed Subchapter V designations for debtors whose Chapter 11 cases were already existing on the effective date (February 19, 2020) of the Small Business Reorganization Act (“SBRA”). And their opinions are instructive on procedures and legal standards for doing so. These five cases run the gamut of... Continue Reading →
By: Donald L Swanson The CARES Act (“Coronavirus Aid, Relief, and Economic Security Act” ) is now law—and has been since March 27, 2020. Bankruptcy Amendments in CARES Act Sec. 1113 of the CARES Act deals with “Bankruptcy” and contains the following provisions. Eligibility for Small Business Bankruptcy. Total-debts eligibility for the Small Business Reorganization Act... Continue Reading →
Their ability to hunker down and survive is dependent, first and foremost, on the continuing availability of cash.
The SBRA exists today because small businesses have had difficulty getting plans confirmed under chapter 11.
Since the obvious intent of Congress is to help small businesses in financial stress and to abbreviate their Chapter 11 process, courts will try to avoid roadblocks when they can.
The absolute priority rule is still an impediment to reorganizing medium-size businesses in Chapter 11.
By: Donald L. Swanson Family businesses who need to reorganize have a tough go in bankruptcy. There are lots of impediments, both legal (e.g., absolute priority rule) and economic (Chapter 11 is expensive). The Small Business Reorganization Act of 2019 will help, but it only applies to businesses with less than $2.7 million of debt. An Extraneous... Continue Reading →
By: Donald L. Swanson “I’m very proud of the fact that, in four decades of practicing law, I’ve had only one client go to federal prison for lying on these bankruptcy schedules.” —Yours truly, emphasizing to clients the importance of accuracy and full disclosure in preparing bankruptcy schedules. One of the great challenges in representing... Continue Reading →
By: Donald L Swanson The Small Business Reorganization Act of 2019 has the following discharge provisions: Plan confirmation “discharges the debtor from” specified debts (see § 1181(c), § 1192 & § 1141(d)(1)(A)); but The discharge takes effect only “after completion” of “all payments due within” the 3 to 5 years term of the plan (§ 1192).... Continue Reading →