Author Update: On Saturday, March 27, 2021, President Biden signed the “COVID-19 Bankruptcy Relief Extension Act” into law, which – among other things – extended the increased debt eligibility threshold until March 27, 2022.
The COVID-19 pandemic has brought incredible difficulties to businesses across the nation. In an attempt to alleviate the pressure, Congress passed the 2020 CARES Act, which provided many forms of stimulus. One component of the act increased the maximum debt limit from $2,725,625 to $7.5 million for Subchapter V bankruptcy filings under the Small Business Reorganization Act. In other words, Subchapter V used to be available only to businesses with no more than $2.7 million in debt. The CARES Act raised that limit to $7.5 million, making Subchapter V available to millions of more businesses.
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