While most are familiar with the provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, there’s one provision that hasn’t garnered attention and is a powerful tool to small businesses: Small Business Reorganization Act of 2019 (SBRA) known as Subchapter V. In his Lawyer Monthly article, Partner Mark Horoupian discusses the advantages of this provision.
“The concept behind the SBRA was to make Chapter 11 accessible to those companies and individuals who could restructure a salvageable enterprise were it not for the heavy administrative burden of Chapter 11,” wrote Horoupian. “Companies and individuals that have been hit hard by the pandemic and/or were in distress independently of the virus, should give serious consideration to taking advantage of the significant benefits of the SBRA while they still can.”
Horoupian adds, the significant raise in the debt limit provides distressed companies with a very effective tool to help address the damage caused or exacerbated by the pandemic. Additionally, the elimination of the disclosure statement, impaired consenting class, creditor’s committee and trustee fees make Chapter 11 reorganizations more efficient, streamlined, and less expensive than the traditional Chapter 11 process.
Read the full article here.