Client Alert: New Law Provides Struggling Small Business Owners With New Potential Lifeline
Small business owners now have the lifeline they need to work through a rough patch, cyclical downturn or other unexpected problem by taking advantage of the new Small Business Reorganization Act of 2019 (the “SBRA”).
SBRA is a significant change in existing bankruptcy law that greatly reduces or eliminates many of the costs associated with a bankruptcy reorganization, expedites the process for a quick turnaround, and preserves ownership and control of the business. In a case under SBRA, a small business debtor will work with an appointed trustee whose main role is to facilitate a viable plan of reorganization among the debtor and its creditors.
Importantly, a struggling business owner can re-structure and satisfy its debts from the “disposable income” portion of its cash flow over a three to five year period. The company can secure court approval and implement such a plan even if the company’s creditors oppose.
In short, SBRA is a new and important tool for small businesses that are experiencing creditor-related issues. An experienced corporate restructuring professional can work with the business to guide it through a cost effective and quick SBRA case to save the company and see it through to better times.