The absolute priority rule is still an impediment to reorganizing medium-size businesses in Chapter 11.
A Strategy for Reorganizing Medium-Size Businesses With Too Much Debt For The Small Business Reorganization Act
Mediation — And the Role of the Small Business Trustee
By: Donald L Swanson “Those with business, managerial, consulting, mediation and operational experience are encouraged to apply.” --From “Solicitation” by U.S. Trustee for Applicants to Serve as Subchapter V Trustees (emphasis added) Back in August of this year, the Small Business Reorganization Act of 2019 became law. It’s effective date is 180 days later—February 19, 2020.... Continue Reading →
Small Business Reorganization Act: A Great Law With A Major Flaw
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 →
Plan Confirmation Standards Under Small Business Reorganization Act of 2019
By Donald L. Swanson The Small Business Reorganization Act of 2019 is said to provide a “Chapter 12-type” reorganization opportunity for small businesses within Chapter 11. That comparison is apt. Here’s why: Chapter 12 came into existence, back in 1986, because farmers had difficulty getting plans of reorganization confirmed under Chapter 11; The Small Business Act... Continue Reading →
Trustee’s Role Includes Financial Adviser & Mediation: Small Business Reorganization Act of 2019
By Donald L. Swanson The Small Business Reorganization Act of 2019 became law on August 23, 2019. But the date it takes effect is "180 days" later: on February 19, 2020. This new law helps small business reorganize under Chapter 11 in much the same way that farmers reorganize under Chapter 12 and consumers reorganize under... Continue Reading →
When “Small” is Still Too Big: The Small Business Reorganization Act
By Donald L. Swanson The Small Business Reorganization Act is now law! The House of Representatives passed it on July 25, 2019; The Senate passed it on August 1, 2019; and The President signed it on August 23, 2019. This Act is much-needed and long overdue. It provides Chapter 12-type relief for small businesses within Chapter... Continue Reading →
Small Businesses and Entrepreneurs in Financial Stress Need a Chapter 12 Solution
By Donald L. Swanson It’s been 40 years since enactment of the Bankruptcy Code [Fn. 1]. And the Code has been highly effective in many contexts. But the Bankruptcy Code is, and always has been, inadequate for the needs of small businesses and entrepreneurs in financial stress. Congress needs to address this deficiency. What Works &... Continue Reading →
Newly-Proposed Bankruptcy Legislation (“Small Business Reorganization Act”) Needs To Be Enacted ASAP
By: Donald L. Swanson New bankruptcy legislation to help small businesses and entrepreneurs, titled the “Small Business Reorganization Act (SBRA),” is wending its way through the U.S. Senate. This piece of legislation is long over-due and should be enacted with all due haste. Here are some reasons why. Mom & Pop Businesses Have the Same Bankruptcy... Continue Reading →
We Need a Bankruptcy System for Small Businesses Without the Absolute Priority Rule: Two Alternatives
By Donald L. Swanson During the entire existence of the Bankruptcy Code (enacted in 1978), Chapter 11 rules have been essentially the same for large and small businesses. General Motors, for example, is governed by the same Chapter 11 bankruptcy rules that govern every small Mom & Pop enterprise. I've always thought this same-treatment to... Continue Reading →
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