Small businesses with less than $2.5 million in debt would be able to file bankruptcy more quickly and cheaply under bipartisan legislation teed up for consideration in 2019, Bloomberg Law reported. The bill (S. 3689, H.R. 7190) would add to the Bankruptcy Code a separate subchapter for small businesses. Small businesses, which account for 80 to 90 percent of business bankruptcy filings, would be treated more like individuals than corporate filers under the bill. Small business owners would find it easier to keep their ownership interests because a standing trustee would oversee every case, a procedural protection preferred by creditors. Advocates say the current Bankruptcy Code makes it difficult for small businesses to reorganize and forces them to use alternatives that often result in liquidation. “It’s a well-balanced bill that streamlines the process for small businesses that need it and increases recovery for creditors where it is used,” Professor Edward Janger, Brooklyn Law School, Brooklyn, N.Y., told Bloomberg Law. The bill’s sponsors include Sen. Chuck Grassley (R-Iowa), the departing chairman of the Senate Judiciary Committee, and Rep. Doug Collins (R-Ga.), who is expected to be the top Republican on the House Judiciary Committee next Congress. They were joined by Sheldon Whitehouse (D-R.I.) and David Cicilline (D-R.I.), who serve on the Senate and House Judiciary Committees respectively. The bill is likely to be reintroduced next year with many of the same sponsors despite House and Senate leadership changes, said Samuel J. Gerdano, executive editor of the American Bankruptcy Institute, Alexandria, Va. There’s a “good chance” that Collins will reintroduce the legislation, according to Collins' communications director.
