ABI applauds President Joe Biden for signing into law yesterday the amended S.3823, the “Bankruptcy Threshold Adjustment and Technical Corrections Act.” The bill was introduced by Sen. Charles Grassley (R-Iowa) to raise the debt limit back to $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the measure also raises the debt limit for individual chapter 13 filings to $2.75 million and removes the distinction between secured and unsecured debt for that calculation. The bill passed the Senate on April 7 and the House of Representatives on June 7. All provisions of the law will sunset two years from enactment, on June 21, 2024. Due to priorities and procedural issues, the Senate was not able to address S.3823 prior to the March 27 sunset of the $7.5 million eligibility limit for small businesses electing to file for bankruptcy under subchapter V of chapter 11. The debt-eligibility limit returned to the original $2,725,625 threshold on March 28 that had been established under the “Small Business Reorganization Act of 2019” (SBRA). In addition to providing a two-year extension of the subchapter V debt limit back to $7.5 million, the law also covers any chapter 11 case eligible under the reinstated subchapter V debt limit that was pending or filed after the March 27 sunset.
