Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistFeaturesBankruptcyRegulation

Why Subchapter V Is More Appealing Than Chapter 11 for Small Businesses

By By Stuart B. Newman and Steven H. Newman
June 01, 2022

While Congress began passing legislation regarding bankruptcy relief early in the 19th century, it was not until The Nelson Act of 1898 before the country had its first modern bankruptcy legislation. Our current Bankruptcy Code traces back to the Bankruptcy Reform Act of 1978.

Flash forward almost 50 years to the COVID pandemic, our bankruptcy laws have developed into a well-established mechanism for protection of both individual and business entity protection, but that relief was frequently beyond the reach of debtors who found the process of filing for relief too complicated and, ironically, too expensive. Notwithstanding COVID's almost instantly devastating impact on the economy, the number of bankruptcy filings in this country in 2020 declined more than 30% from the prior two years.

While there may have been other reasons for the decline in filings (for example, state emergency debt moratorium legislation; consumer and business stimulus programs; and even Pandemic-related court closures), Congress, as early as 2019, saw the need to increase the ability of small businesses to utilize the reorganization benefits of Chapter 11 in a more efficient and less expensive procedure. It passed the Small Business Reorganization Act of 2019 (the SBRA), which became effective on Feb. 19, 2020, right at the start of the pandemic in this country. (Another attempt at broad, consumer-based legislative relief introduced that year by Sen. Elizabeth Warren, the Consumer Bankruptcy Reform Act of 2020, died in Congress.)

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

The Cost of Making Partner Image

Making partner isn't cheap, and the cost is more than just the years of hard work and stress that associates put in as they reach for the brass ring.