The Small Business Reorganization Act of 2019 (SBRA) became effective on the eve of the economic free fall stemming from the COVID-19 pandemic. Longleaf Law Partner’s bankruptcy law expert, Cindy G. Oliver, explains the new law in our 13-part series, Bankruptcy Buzz.
Part 7 of 13:
Unsecured creditors generally do not receive a payment on their claims in a Chapter 11 bankruptcy case until a plan of reorganization is confirmed, and a secured creditor may only receive adequate protection payments prior to confirmation of the plan. Hence, the longer the period between the beginning of the bankruptcy case and the confirmation of a plan of reorganization, the more financial pain felt by the creditors.
The Small Business Reorganization Act (SBRA) enacted in February 2020, fast tracks the confirmation process by requiring a small business debtor under Subchapter V of Chapter 11 to file a plan of reorganization within 90 days. The deadline is 120 days in a traditional Chapter 11. The bankruptcy court can extend the 90-day deadline “due to circumstances for which the debtor should not justly be held accountable.” This fast-track reorganization requires a successful debtor to proceed efficiently and hopefully provides faster monetary recovery to the creditors.
The information provided in this article does not, and is not intended to, constitute legal advice. No action should be taken in any particular circumstance or fact situation with reliance upon the information contained in this article without obtaining the advice of an attorney.