The Small Business Reorganization Act of 2018 features Affordable Price Points & Expedited Process

The Small Business Reorganization Act of 2018 features affordable price points and expedited process for small businesses with a debt load of $2.5 million or less.   The goal is to encourage and facilitate the rebuilding and retooling of small businesses in our turbulent yet very entrepreneurial economy.  The proposed law provides incentives for owners who want to keep ownership stakes and protections for creditors who want to be repaid quickly and reliably.  The bill would cut the cost of bankruptcy by requiring companies to file a repayment plan within 90 days and also eliminating half of the two-step process for judges to approve the plan and disclosure statement.  The bill would also cut costs by eliminating the automatic appointment of an unsecured creditors committee and make it harder for creditors to object to repayment of debt with future profits over a period of up to five years.  Existing rules require owners to repay all existing debts in full if they want to remain in control and keep their equity.  The bill would also make the threshold for so-called “preference” lawsuits against creditors $25,000 for return of monies paid to them within 90 days of the bankruptcy filing and redistribution pro rata among all the creditors as a group.   If you are a small business in financial distress or need of out-of-court work-out or bankruptcy restructuring advice, we would be happy to help you.  For more details on the proposed Act, please review the following article.