The Small Business Reorganization Act of 2019
Helping Miami’s Small Business Debtors Regain Financial Stability
Chapter 11 Bankruptcy is meant to allow businesses to continue operating while they restructure their finances and negotiate debt with creditors. Historically, however, only larger businesses and corporations have derived success from this type of bankruptcy. Because Chapter 11 is one of the most expensive and complex options, small businesses have struggled to see the same success, but many cannot qualify for any other type of bankruptcy.
In fact, little more than 25% of small businesses who filed Chapter 11 between 2008 and 2015 managed to create and implement a successful reorganization plan. But the federal government recognized this issue and passed the Small Business Reorganization Act of 2019, and we anticipate an enormous growth in that success rate as a result. As of February 19, 2020, small business debtors can file under Subchapter V of Chapter 11, which offers new advantages and a streamlined process for small business bankruptcy. LSS Law are prepared to help small businesses take full advantage of this recalibrated option.
To see if Subchapter V of Chapter 11 Bankruptcy may be right for you, get in touch with our small business reorganization attorneys in Miami today.
Chapter 11 Bankruptcy for Small Business Owners in Miami
Both companies and individual business owners can file under Subchapter V of Chapter 11 Bankruptcy, so long as their total debt does not exceed $2,725,625, and most of it was accrued for commercial or business purposes.
Here are 5 key changes to Chapter 11 Bankruptcy, effective February 19, 2020:
- Less creditor involvement. You, the small business debtor, will submit a repayment plan within 90 days of filing Chapter 11 Bankruptcy. The court will not need to appoint a creditors’ committee, and you won’t need to obtain approval from your creditors before moving forward.
- Appointed trustee. The court will designate a trustee to help facilitate and direct the distributions, but, in most cases, you will still retain full control of your business.
- Use of all disposable income. Your repayment plan will range from 3-5 years, and the court will require you to use all disposable income to make payments.
- Elimination of the Absolute Priority Rule. Previously, you would not have been able to keep your assets unless you paid your creditors in full. With the elimination of this rule, you have a much higher likelihood of retaining your ownership interests.
- Possible mortgage adjustment. If you used the mortgage of your primary residence in connection with your business, you may be able to adjust the loan amount, interest rate, or maturity.
Bankruptcy offers a host of benefits that many small businesses could not previously access. Now, the Small Business Reorganization Act of 2019 presents an unprecedented solution for small business debtors who meet the requirements for Subchapter V. Our Miami small business reorganization lawyers can assess your financial circumstances to determine whether you may be able to take advantage of these significant changes. If so, we can then help you create a repayment plan and walk you through every step of the process.
Bankruptcy Is a Beginning—Not an End
Through over seven decades of collective experience, LSS Law has developed invaluable insight into the bankruptcy process. We have helped countless clients obtain financial fresh starts by developing comprehensive solutions tailored to their unique circumstances. Many of our country’s most legendary entrepreneurs filed bankruptcy before building their legacies, and we want to play a role in the success we know you can achieve. If you are a small business owner looking for a solution to your mounting debt, let us help you find a way out.
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