Small Business Reorganization Act: Chapter 11 Procedures for Small Business Bankruptcies

Recording of a 90-minute CLE video webinar with Q&A

Conducted on Thursday, January 7, 2021

Recorded event now available

or call 1-800-926-7926

This CLE course will examine the new Small Business Reorganization Act of 2019 (SBRA) after almost one year, and its ramifications for small businesses under Chapter 11. The panel discussion will include the CARES Act's effect on eligibility, the streamlined reorganization procedures outlined in the new Subchapter V, and emerging issues concerning the Paycheck Protection Plan (PPP) debt forgiveness provisions.

Description

The SBRA became effective Feb. 19, 2020, and represented a substantial change in bankruptcy law and practice for small business debtors. Bankruptcy counsel need a thorough understanding of the new Subchapter V and the options available to debtors that qualify, including how the CARES Act and other provisions impact eligibility and PPP benefits.

Subchapter V is available to debtors engaged in commercial business activities, excluding the ownership of single asset real estate, who have secured and unsecured debts less than $7,500,000 (subject to adjustment for inflation after 2020), but is set to return to the original limit of $2,725,625 in 2021. To proceed under Subchapter V, the small business debtor must elect to do so. Otherwise, the small business debtor's bankruptcy will continue as a "small business case."

Subchapter V offers a more straightforward and cheaper path to reorganization and does not require a creditors' committee or disclosure statement except by court order for cause. Perhaps most significantly, U.S. trustee fees are not incurred. The creditors' ability to block confirmation is significantly weakened.

Because the absolute priority rule is abrogated, a confirmation plan will be deemed fair and equitable to objecting unsecured creditors if the debtor pays projected disposable income to be received over at least three years.

Listen as our authoritative panel highlights the changes to bankruptcy practice resulting from SBRA and the emerging issues being litigated.

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Outline

  1. Definition of a small business debtor
  2. Appointment and role of trustee
  3. Powers and duties of the debtor in possession
  4. Creditors committee
  5. Property of the estate
  6. Filing of plan and solicitation
  7. Confirmation of plan
  8. Modification of plan
  9. Discharge
  10. Proposed bankruptcy rules
  11. Amendments to preference provisions

Benefits

The panel will review these and other critical issues:

  • Can the SBA deny PPP or other benefits solely becuase the borrower is in bankruptcy?
  • Can debtors use PPP proceeds or other CARES Act benefits to fund a Subchapter V reorganziation?
  • What issues in small business reorganizations under Chapter 11 does SBRA attempt to address?
  • How is a "small business debtor" defined under SBRA, and how can it impact the administration of a small business case?
  • What are the features of new Subchapter V that streamline the reorganization process for a small business debtor?
  • What does SBRA say about the absolute priority rule?

Faculty

Kucera, Jeffrey
Jeffrey T. Kucera
Partner
K&L Gates

Mr. Kucera helps clients to enforce, interpret, restructure, and renegotiate lending arrangements. He is a litigator...  |  Read More

Norton, William
William L. Norton, III
Partner
Bradley

Mr. Norton focuses his practice in the business bankruptcy area, dealing in all aspects of bankruptcy cases, creditor...  |  Read More

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