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Operating a small business is no minor feat, especially in today’s economy. Many small business owners are already aware that the statistics are not in their favor. According to the Small Business Administration (SBA), the average survival rate of a small business at five years is only 48.2 percent. Debt plays a major role in these numbers.
President Donald Trump recently signed the Small Business Reorganization Act. The law simplifies how smaller businesses can use Chapter 11 bankruptcy. Here is a brief overview of what small business owners need to know.
What Is the Small Business Reorganization Act?
The Small Business Reorganization Act adds a new subchapter to Chapter 11 bankruptcy. This new subchapter makes it easier for small businesses to use Chapter 11 bankruptcy if their liabilities do not exceed $2,725,625.
Small business owners will have an easier time retaining ownership and reorganizing under the new law. Under this new law, small business owners who opt to use the amended designation can pay a portion of their debts over a three to five-year period. Business owners have 90 days to file a reorganization plan and will have an easier time securing an extension. These changes reduce liquidations while allowing small business owners to rebuild operations.
How Does the Small Business Reorganization Act Affect My Business?
How the law affects your business depends on your choices while filing and your individual circumstances. Small businesses can elect to use the new changes. The Small Business Reorganization Act expedites the Chapter 11 process for these businesses. A trustee is assigned to each Chapter 11 case involving a small business that is using the new subchapter. This and other factors make these cases more like Chapter 13 bankruptcy cases. Additionally, there are no creditors’ committees with these small business Chapter 11 cases, which saves on time and costs.
There are other changes that our business bankruptcy attorneys can discuss. If you have questions about using the small business designation, then you can speak with one of our Kansas City business bankruptcy attorneys. The Small Business Reorganization Act goes into effect on February 19, 2020.
We have a lot of information about Chapter 11 bankruptcy on our site that can help you learn more about its advantages. Chapter 11 bankruptcy allows business owners to maintain control of operations while restructuring cumbersome debts.
Contact Our Kansas City Business Bankruptcy Lawyer to Learn More
Are you a small business owner who is considering bankruptcy for your business? The Small Business Reorganization Act is a positive move in the right direction for small business owners. We can explain how the changes could affect a Chapter 11 case for your business.
To discuss your options for bankruptcy, the first step is to reach out to an experienced Kansas City business bankruptcy lawyer. The attorneys at The Sader Law Firm are here to help. To schedule a consultation, you can call us at (816) 561 1818. You can also use the contact form on our website.
