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The Bankruptcy StrategistFeaturesBankruptcyLitigation

Time Is Running Out On Restructuring Under New Subchapter V

By Jerrold L. Bregman
November 01, 2020

The clock is ticking for small businesses (with debt of less than $7.5 million) to take advantage of a new way to restructure under Chapter 11 of the Bankruptcy Code. New Subchapter V — part of the Coronavirus Aid, Relief and Economic Security Act of 2020 (the CARES Act) — is set to expire early next year. [Editor's Note: For more on the CARES Act, see, "Unforeseen Consequences for Bankruptcy Practice In CARES Act," in the October issue of The Bankruptcy Strategist.]

The CARES Act special bankruptcy relief increased the debt limit under the Small Business Reorganization Act of 2019 (SBRA) from about $2.7 million to $7.5 million in light of the unprecedented financial distress being experienced by small businesses all across the county, including especially by small retailers and manufacturers, restaurants and services providers. The increased debt limit, which became effective Feb. 20, 2020, includes a one-year sunset.

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