Businesses have often used Chapter 11 of the Bankruptcy Code as a means to restructure debt. Due to the cost and onerous statutory requirements to successfully complete the bankruptcy process, many businesses, especially small businesses, have been deterred from seeking Chapter 11 relief.

On Aug. 23, 2019, Congress passed the Small Business Reorganization Act (SBRA) into law, which became effective on Feb. 19, 2020. 11 U.S.C. §1181 et seq. The SBRA adds Subchapter V to Chapter 11 of the Bankruptcy Code, which created a more efficient and less costly process for small businesses to reorganize. While it wasn’t enacted in response to the economic consequences of the Coronavirus (COVID-19), for the reasons discussed in this article its provisions will help many small businesses recover.

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