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Restructuring a Small Business: 5 Benefits of Filing Under the Small Business Reorganization Act (subchapter V of Chapter 11)

June 9, 2020

In these difficult economic times, many small business owners will face what they might view as insurmountable challenges. One option to be considered is filing a petition under subchapter V of Chapter 11. As highlighted below, there are several advantages that could provide a struggling small business with breathing room and an opportunity to restructure its debt and leases while the owner could still retain the equity after reorganization.

· Eligibility is for companies with debts less than $7.5 million (instead of $2.75 million) for twelve months under CARES Act
· Ability to reject leases and limit landlord claims
· Ability to confirm a reorganization plan and retain all of the equity in the company
· Ability to emerge as a reorganized company on an expedited schedule
· No fees payable to the Office of the United States Trustee