The Small Business Reorganization Act, Effective February 2020

By Kanika Ferency posted 09-03-2019 15:22


On August 26, 2019, President Donald Trump signed the Small Business Reorganization Act (SBRA), to take effect in February 2020. SBRA is intended to offer small businesses with “aggregate liabilities that do not exceed $2,725,625 the opportunity to resolve their outstanding debts through a condensed and price-conscious Chapter 11 bankruptcy proceeding.” Small businesses are often unable to navigate the complex Chapter 11 bankruptcy procedures, which make it difficult and costly to get a confirmed plan. This frequently forces them to liquidate. SBRA was created to streamline the process. 

SBRA includes the following provisions

  • Appointment of a trustee
  • Streamlined reorganization process
  • Elimination of the New Value Rule
  • Modification of certain residential mortgages
  • Delayed payment of administrative expense claims
  • Discharge limitations

In the coming months, we will be updating ICLE materials to reflect the new act, which is effective in February 2020. Be sure to stay tuned!