How the Small Business Reorganization Act helps with Bankruptcy Reorganization (SBRA)
After all the time and effort that you’ve put into your business – it’s hard to consider filing for bankruptcy. Unfortunately, things don’t always happen as planned. Sometimes, a drastic change needs to save your hard work.
Adding SBRA to the Chapter 11 bankruptcy code makes bankruptcy filing easier for small businesses. Businesses that have fallen into debt can have restructured to save it. A Chapter 11 bankruptcy can do just that, but business owners must first look at all of their options.
If you are filing for bankruptcy, it is important to understand what the SBRA offers you. The Ursulova Law Offices will help you to understand the process when you are ready to decide.
Passing the SBRA made Chapter 11 bankruptcy for small businesses faster and less expensive. It added Subchapter 5 to Chapter 11 bankruptcies. The act applies to businesses owing less than 2.7 million dollars and meeting certain other requirements.
This plan is distinguishable from the rest of Chapter 11 because it does not require the debtor’s creditors to approve the court plan for repaying debts. The debtors must file their plan within 90 days of the bankruptcy filing. The act effectively removes obstacles that often make Chapter 11 bankruptcy inaccessible to smaller businesses.
Reorganization is a business plan to change a company’s structure or finances. Small business bankruptcy Chapter 11 allows your business to operate while paying off its debts. This will give your business time to recover and become profitable again. It does this by:
- Letting businesses partially pay back unsecured debts
- Restructuring debts so they have lower payments paid back over a longer period
- Letting businesses take out new loans
Because the SBRA has shorter deadlines for the bankruptcy process, small businesses don’t have to wait as long before they can restructure. This makes it more affordable for them to get a Chapter 11 bankruptcy.
Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES) to save families, businesses, and employees from financial distress. It was a response to the Coronavirus pandemic and turned into in 2020. For businesses, it provides loans.
The CARES Act and Chapter 11 bankruptcy are neither ones nor the same. The CARES revised Chapter 11 bankruptcy by increasing the debt ceiling to 7.5 million to allow more businesses to qualify for the SBRA. Other revisions include:
The appointment of a trustee in every Subchapter V case, but the trustee does not operate the business, investigate the debtor, or its operations unless the court orders them to do so. The trustee’s main responsibility is to help the debtor formulate a plan, negotiate with creditors, and ensure a successful operation. The trustee does not hire professionals except in unusual circumstances.
The court holds a status conference to determine how to proceed with the case within 60 days of the bankruptcy filing.
Certain requirements for confirming the plan and its contents get revised through the SBRA. This allows the court to approve the plan even if creditors object. The company’s owners will keep their interests without paying creditors in full or getting their consent.
Getting legal assistance from a bankruptcy attorney Brooklyn is the best thing you can do before appearing in court despite the consideration that made things easier in facing bankruptcy. Because the legal code can be complex, it can be hard to know the best option.
Ursulova Law Offices serves businesses in New York and can provide a knowledgeable bankruptcy lawyer Brooklyn to help you. You’ve worked hard for your business for years, so you will want it in good hands. Don’t hesitate to call us at 718-336-7000.