WASHINGTON, D.C. – Senators Thom Tillis (R-NC), Chuck Grassley (R-IA), Sheldon Whitehouse (D-RI), Amy Klobuchar (D-MN), Joni Ernst (R-IA) and Richard Blumenthal (D-CT) recently introduced the bipartisan Small Business Reorganization Act (SBRA). The legislation streamlines existing bankruptcy procedures and provides new tools to improve a small business’ ability to restructure.
“The current one-size-fits-all method that dictates the Chapter 11 bankruptcy process unfairly disadvantages small businesses. This bipartisan legislation is a common sense approach to streamlining existing bankruptcy procedures while also providing new tools for small businesses looking for a successful path through restructuring,” said Senator Tillis.
“Our bankruptcy system is designed to help highly complex businesses reorganize after falling on hard times, but for many small businesses going through bankruptcy, these requirements can create unnecessary burdens that stall recovery. The Small Business Reorganization Act takes into account the unique needs of small businesses and streamlines existing reorganization processes. A well-functioning bankruptcy system, specifically for small businesses, allows businesses to reorganize, preserve jobs, maximize the value of assets and ensure the proper allocation of resources,” Senator Grassley said.
Chapter 11 in the bankruptcy code was designed for administering complex business reorganizations involving multi-million dollar companies. Though several provisions specifically focus on small business debtors, a significant amount of research shows that Chapter 11 may still create difficulties for small businesses, including high costs, deficits and procedural roadblocks. The legislation addresses these issues by adding a new subchapter V to Chapter 11 to streamline the bankruptcy process for small business debtors. By reducing liquidations and increasing recoveries to creditors, the bill will lead to more successful restructurings.
Specifically, key provisions of the Small Business Reorganization Act will increase debtors’ ability to negotiate a successful reorganization and retain control of the business, reduce unnecessary procedural burdens and costs and increases oversight and ensures quick reorganization.
The SBRA was crafted in consultation with the National Bankruptcy Conference, American Bankruptcy Institute and National Conference of Bankruptcy Judges and incorporates input from numerous stakeholders ranging from commercial lenders to the U.S. Trustee.
Representative Doug Collins (R-GA) and Representative David Cicilline (D-RI) are working to introduce companion legislation in the House of Representatives.