New Bankruptcy Bill Aims to Expedite SMB Chapter 11 Cases.
U.S. lawmakers proposed a new bill on Nov. 29, 2018 that plans to change the way small businesses (SMBs) file for bankruptcy, should they be $2.5 million or less in debt. The bill is titled The Small Business Reorganization Act of 2018.
The act will expedite the process of SMBs filing for Chapter 11 bankruptcy, making the time for creditors seeking payments much shorter, while also cutting back on attorney's fees due to quicker turnarounds in court.
The Chapter 11 Bankruptcy Code is currently written with large corporations in mind, said Jim Wise, managing partner with Pace LLP. When looking at smaller bankruptcies consisting of a limited number of secured and unsecured creditors, not much needs to get caught up in the pitfalls of larger bankruptcies. The current legislation does not account for much in the SMB-sphere, leaving little regulation for SMBs and the creditors attempting to collect on SMBs.
"[The bill] tries to understand--without impairing the rights of creditors or debtors in Chapter 11--how can we make this process a little more expeditious and a cost saving for debtors and creditors, if you are a genuine small business*" Wise said. "That's a big challenge I think for creditors that are out there seeing so many expenses in Chapter 11 chewed up by administrative court costs."
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|Date:||Feb 1, 2019|
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