Many small to mid-sized business owners are simply unaware of the tools currently available for preserving their business. A recent article in The Washington Post suggests that making it easier to file bankruptcy could avert economic catastrophe.
While we do not disagree, the authors may not be aware that some steps have already been taken in that direction.
Most importantly, for small business debtors wanting to take advantage of new small business bankruptcy provisions of chapter 11, the CARES Act raised the debt limits from $2.7 million up to $7.5 million. This increase will allow for many more businesses in need of relief to take advantage of the new streamlined procedures for reorganizing their business while maintaining their ownership.
Congress made this temporary change specifically to allow more businesses to take advantage of this process, but the problem is not the entrance to chapter 11 but rather the exit. Any company hoping to successfully emerge from Chapter 11 will have to confirm a plan that projects their business’s future revenues and expenses. This will be the challenge unless and until we have a clear lens (or really any lens) into the future of our economy.
Until then, any projection will be just a guess. Of course, with the passage of time, we will know more. Until then, any small business hoping to survive this crisis should consult with counsel experienced in business bankruptcy to ask about the new small business chapter 11. Hopefully, they can get in while getting out is still a possibility.
If you have questions about options available to your business during this time, please contact one of Bast Amron’s Insolvency Litigators.