2 Years Of Small Biz Bankruptcy Law: Winners And Losers

Brian Shaw discusses the beneficial and detrimental effects of the Small Business Reorganization Act (SBRA) in an article titled, “2 Years Of Small Biz Bankruptcy Law: Winners And Losers” in Law360.

There has been a decline in the number of Chapter 11 filings since 2009, and a number of factors cited to explain this decline. Brian points out that “the administrative costs of the bankruptcy and the probability that equity holders will lose their interests in the debtor” are two principle issues that never get addressed.

While the SBRA became effective on February 19, 2020, the debt threshold of Subchapter V was impacted due to the enactment of the Coronavirus Aid, Relief, and Economic Security Act on March 27, 2020, as a result of the unforeseen pandemic. In this article, Brian talks about the generally positive results of SBRA, the effects of the pandemic, and analyzes the “unofficial winners, losers, and undecideds” and the results needed before SBRA can be deemed a success.

“Subchapter V has been well-received in the bankruptcy community. Most constituents view the increase in small businesses' access to Chapter 11 as a favorable outcome. But that sentiment does not mean that Subchapter V will ultimately be deemed a success.” Brian states. 

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