The Small Business Reorganization Act of 2019 streamlines existing rules for small businesses to restructure successfully under Chapter 11 of the Bankruptcy Code. A small business debtor can be a business entity (corporation or LLC) or an individual, engaged in business, with debts less than about $2.7 million. Some of the Act’s provisions include:
A trustee, similar to those appointed in Chapter 13 cases, will be appointed to oversee each small business case;
No creditors committee will not be formed;
The Court can confirm a debtor’s plan without the support of any class of creditors as long as the plan does not discriminate unfairly and is deemed to be fair and equitable with respect to each class of claims;
To be fair and equitable, the Chapter 11 plan must provide that all of the debtor’s projected disposable income to be received during the length of the plan will be applied to make payments under the plan for a period of 3 to 5 years.
Individuals can also file a Chapter 11, if they are above the Chapter 13 debt limit, which is currently $ 465,275 for unsecured debt and $1,395,875 for secured debt.