New Bankruptcy Law Could Save Small Businesses Slammed by Virus
The Small Business Reorganization Act may qualify as many as 70% of small businesses to reorganize much cheaper and faster after a bankruptcy.
The law went into effect just two months ago to help insolvent companies with less than $2.7 million in debt by temporarily raising the debt limit to $7.5 million for the next year, according to Bloomberg Law.
The one-year $7.5 million debt cap established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act follows the National Bankruptcy Conference’s recommendation to cover more small businesses, per the report. The expansion should provide eligibility to 60% to 70% of small companies. The new law will also allow for more out-of-court resolutions.
“This is going to help a lot of small businesses survive this thing,” bankruptcy attorney Bob Keach, told Bloomberg Law. “Thank God they got it passed.”