Engelman Berger banking and finance attorney Brad Pack’s article titled “Small Business Bankruptcy Relief Expansion About to Expire” was published by AZ Big Media.
In his article, Brad explains how the addition of “Subchapter V” to Chapter 11 of the U.S. Bankruptcy Code provides small businesses in financial distress the opportunity to restructure their debts without the complex disclosure obligations, costly fees, and other procedural hurdles of traditional bankruptcy proceedings.
The law that created Subchapter V originally limited eligibility to businesses whose debts did not exceed $2,725,625. That limit was increased to $7.5 million by the CARES Act, but only for a one year period. Brad’s article warns that time may be running out for small businesses to take advantage of the increase in the debt limit.
There may still be hope for businesses that want to take advantage of Subchapter V’s enactment, though. Brad states that, “Senators Dick Durbin and Chuck Grassley have recently introduced a separate bill that would extend the increase in the debt limit by another year.” It is uncertain whether or not the bill will gain the support necessary for its passage, so Brad suggests that “financially distressed businesses whose debts exceed $2.7 million consult with bankruptcy counsel now to determine whether a Subchapter V bankruptcy petition is right for them,” as every client’s situation is unique.
To read Brad’s article, click here.