In Michigan’s Western District — which spans 34 counties in the Lower Peninsula and the entire Upper Peninsula — small businesses like Purple East in Grand Rapids and six other entities as of Oct. 20 have elected to file for subchapter V relief established under the Small Business Reorganization Act (SBRA), MiBiz.com reported. In the Eastern District covering the rest of the state, 10 plans had been filed under subchapter V. The SBRA includes fewer costly requirements under a typical chapter 11 — for example, it doesn’t generally require debtors to file a disclosure statement. It also seeks to eliminate the potential for competing reorganization plans from creditors. Meanwhile, the law includes a 90-day deadline for a debtor to file a plan after a relief order. “The expedited process and the return have reduced costs and I think ended up with a better result for the creditors I’ve represented," said Richardo Kilpatrick, president of Troy-based Kilpatrick & Associates PC, who now serves as a subchapter V trustee under the new law. “We’re starting to see an uptick in (SBRA cases) and I think we’re going to see a lot of successful reorganizations now,” Almassian said. Todd Almassian, partner at Grand Rapids-based Keller & Almassian PLC, said requiring only debtors to file a reorganization plan while allowing them to retain a stake in the company are two key features of the SBRA. “In the past, the administrative expense burden and the procedural hurdles prevented some small companies from reorganizing,” Almassian said.
