Buried in debt, Eric Brown used to worry that one of his lenders would arrive at his worksite and repossess a piece of heavy machinery he uses to lay utility cables underground. His company, Brown Bros. Telecom & Utility in Dalton, Ga., filed for bankruptcy March 13 after collecting less money than expected on a completed project. But to his surprise, getting a fresh financial start has been easier than he thought, thanks to a new law meant to make the process cheaper and faster while helping owners retain their ownership, the Wall Street Journal reported. “It’s been an absolute game-changer,” said Brown. “And so far, it’s kept me working.” The problems facing Brown’s company predated the economic fallout from the coronavirus pandemic, but attorneys and others who work with small businesses say that the timing will be a big help to companies that have seen their revenue decline amid government-imposed restrictions to slow the spread of the virus. The new rules became law in August last year following bipartisan legislation from congressional lawmakers who relied on recommendations from two legal advisory groups, the National Bankruptcy Conference and the American Bankruptcy Institute. The Small Business Reorganization Act’s changes took effect on Feb. 19, and so far about 350 small businesses are using the new process, according to the U.S. Department of Justice. As part of the rules change, companies must file debt repayment plans more quickly, which is aimed at preventing bankruptcy attorneys from dragging out the process to boost their fees. Small businesses no longer need to pay Justice Department fees or file a formal disclosure statement, a legal document that lawyers charge thousands of dollars to write up. It also gives small-business owners access to a court-appointed financial expert to help fix their problems. The law originally applied to companies with about $2.7 million in debt. In March, Congress raised that limit to $7.5 million for 12 months as part of a sweeping stimulus bill aimed at helping businesses cope with the coronavirus.
