What is the Small Business Reorganization Act?
The Small Business Reorganization Act of 2019 aims to make small business bankruptcies faster and less expensive. Generally, the Act only applies to business debtors with secured and unsecured debts of less than $2,725,625. The Act includes the following provisions: the appointment of a Trustee, streamlining the reorganization process, the elimination of the New Value Rule, modification of certain residential mortgages, delayed payment of administrative claims, and a discharge of limitations. The New Value Rule eliminates the requirement for equity holders in the small business to affix a “new value” to their equity interests without paying creditors in full.