Small Business Bankruptcy

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Small Business Bankruptcy

Faster.  Easier.  There is a Small Business Reorganization Act that now streamlines existing rules for small businesses to restructure successfully under Chapter 11 of the Bankruptcy Code.  There are requirements for what qualifies as a small business, but generally, it can be a business corporation or limited liability company, or an individual who is engaged in business, with debts less than about $2.7 million.  Like in Chapter 13 personal reorganizations, Small Business bankruptcies provide for a trustee to oversee the case until finished, but there is no creditors committee and the Court can confirm a reorganization plan without the support of any class of creditors, provided that the plan does not discriminate unfairly and is deemed to be fair and equitable with respect to each class of claims.  To be deemed by the Court to be fair and equitable, the Small Business plan of reorganization must provide that all of the businesses’ projected disposable income over the course of the length of the plan will be applied to make payments under the plan (i.e. that usually means no distributions from the corporation or LLC to the equity).  The plan term is typically 3 to 5 years.

Whether filing bankruptcy or a creditor in a bankruptcy, please feel free to contact us about bankruptcy matters: Dawn at or Tamar at

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.   While intended as information and educational, it is considered advertising under applicable various laws of some states.

Attorneys admitted to practice in California, New York, Colorado, Texas, and Oregon