A Bed & Breakfast (photo by Marilyn Swanson) By: Donald L Swanson Chapter 11 Debtor owns her home and uses it as a Bed & Breakfast. The mortgage on Debtor's B&B/residence is her primary debt. This raises Subchapter V issues like: Eligibility—is her primary debt a consumer debt or a business debt?Eligibility—is her bankruptcy a "single... Continue Reading →
By: Donald L Swanson Subchapter V exists "to improve the reorganization process for small business chapter 11 debtors." In re Wright, Case No. 20-01035 (Bankry.S.Car., Order dated 4/27/2020, Doc. 37 at 5). Charles Wright (“Debtor”) files a Chapter 11 case on February 28, 2020, designating himself a small business debtor and electing to proceed under Subchapter... Continue Reading →
By: Donald L Swanson Cash in a business is like blood in a body: without it, you die! A Huge Challenge Cash availability is a huge challenge for family businesses in bankruptcy. Here’s why: Running out of cash is a common symptom of financial stress that leads to bankruptcy; and A bankruptcy filing will magnify that... Continue Reading →
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.