The CARES Act, passed in March of 2020, provided significant help for small to medium businesses having financial difficulty by expanding the Subchapter V Chapter 11 debt ceiling from $2,725,625 to $7,500,000 for cases commenced during the 1 year period from March 20, 2020 to March 19, 2021. The advantages for proceeding under subchapter V are numerous and include: the ability to keep a company rather than being forced to sell, or pay 100 cents of the dollar of debt; a short (90 day) reorganization period; and a less restrictive definition of reasonable expenses that will allow a company to actually operate and keep meeting the reasonable needs of its owners.
The window of opportunity to file a Subchapter V case is coming to a close. There is no extension of that window on the books, and it appears that nothing may get done until after January.
If you have a small to medium size business and are suffering financial difficulties, having trouble paying over benefits, forestalling payment of employment taxes, failing to service lines of credit, afraid of your next borrowing base report; Subchapter V is very likely your best solution. If you have between 2,725,625 and 7,500,000 in debt, the next 4 months may be your only chance to take advantage of this new Bankruptcy provision and the leeway allowed by the CARES ACT. Talk to a Board Certified Specialist in Bankruptcy.
This article is written by an attorney at Attorney Donald Wyatt PC. Always consult an attorney before making any legal decisions. To make an appointment today, please click here to contact us.