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Small Business Edge provides advice and insights to guide small business owners

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Surviving Bankruptcy

The Oxford Morning Report Newsletter says a new law should make it easier for businesses to survive bankruptcy: Recently “President Donald Trump signed a new law called the Small Business Reorganization Act of 2019, which went into effect in February. Its impact on small businesses is expected to be significant … because the new law will give businesses with less than $2,725,625 in debts more time (90 days) to file a reorganization plan with easier rules for extending. Debts will no longer be required to be paid in full for the business owner to retain ownership of a company. Instead, the owner will have to abide by a new formula for payback that projects disposable income over a period of three to five years. There will be less red tape because business owners will now be able to appoint a ‘standing trustee’ instead of a credit committee to oversee their reorganization process.

“There’s also a new way for determining the owners’ and creditors’ equity interests, based on what is ‘fair and equitable.’ Most significant—in my opinion—is that it will also be much harder for creditors to take away certain personal assets of the business owner, such as a home or place of residence. Also helping will be an extension of the time period for the payment of administrative expenses.”

Bankruptcy photo by Zerbor/Shutterstock



Rieva Lesonsky

CEO, President & Founder at GrowBiz Media, and member of the SMB Experts.

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