On March 27, 2020, the United States Congress enacted the Coronavirus Aid, Relief, and Economic Stabilization Act (“CARES Act”); two key components of this legislation were the Payroll Protection Program (PPP) loan program and an increase to $7.5 million of the debt limits for debtors seeking relief under the recently enacted Subchapter V of Chapter 11 of the Bankruptcy Code. 11 U.S.C. §§1181-1195.

Subchapter V, enacted in 2019 through the Small Business Reorganization Act, streamlined Chapter 11 cases for small businesses with non-contingent, secured, and unsecured debts totaling less than $2,725,625. By proceeding under Subchapter V of the Bankruptcy Code, a debtor may, among other things, solicit disclosure and confirmation in a single-step confirmation process, make use of expedited filing deadlines, and retain equity ownership without those equity holders satisfying the “new value” exception to the absolute priority rule under 11 U.S.C. § 1129(b).