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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.

Lawmakers and the White House made no progress yesterday toward a deal to end the partial federal government shutdown, likely leaving the border-wall funding fight as the first order of business for the new Congress next year, the Wall Street Journal reported. The Senate convened briefly yesterday before adjourning until Monday, Dec. 31, the latest sign that lawmakers don’t expect to reach an agreement to end the shutdown this year. The Senate session on Monday is likely to be perfunctory and brief, absent any developments. Currently in its sixth day, the third partial government shutdown of the year began on Saturday after President Trump and House Republicans upended a bipartisan Senate agreement to fund the government through Feb. 8, with Trump insisting on securing $5 billion for the wall. The shutdown has affected nine of 15 federal agencies, forcing about 380,000 employees to take unpaid leave, also known as furlough, while other workers, deemed essential employees, are set to work without pay. Neither the House nor the Senate are scheduled to hold any votes before Monday at the earliest, and lawmakers and congressional aides from both parties were pessimistic any agreement to reopen the government would be struck before Democrats take control of the House on Thursday, Jan. 3.

One of the House's major bipartisan achievements this year — a sweeping financial deregulation package negotiated by the departing chair of the House Financial Services Committee Jeb Hensarling (R-Texas) and in-coming chair Rep. Maxine Waters (D-Calif.) — may be doomed, Politico reported. As Congress prepares to leave town in the coming days, Democrats are opposing efforts to attach the legislation to a year-end government funding bill. GOP Senate leadership hasn't scheduled a stand-alone vote, which some expect would fail. The stalemate comes as disagreements have cropped up among lawmakers and the Trump administration over a number of provisions in the bill, which the House passed on a 406-4 vote in July. Hensarling is willing to negotiate, but that may not be enough. "We are still working to try to see if it can be brought forward in one of the vehicles that moves, but that’s not resolved yet," Senate Banking Chairman Mike Crapo (R-Idaho) said in an interview. "The longer this takes, the less time there would be for an independent vote on it."

Sen. Chuck Grassley (R-Iowa) and Sen. Sheldon Whitehouse (D-R.I.) yesterday unveiled legislation that could make the chapter 11 bankruptcy process cheaper and faster for companies that file for protection with about $2.5 million or less in debt, the WSJ Pro Bankruptcy reported. The "Small Business Reorganization Act of 2018" creates a new voluntary process with incentives for owners who want to keep ownership stakes and protections for creditors who want to be repaid quickly and reliably. The process applies to companies that file for chapter 11 protection with about $2.5 million of debt or less. The bill could cut the cost of bankruptcy by requiring companies to file a repayment plan within 90 days and eliminating half of the two-step process for judges to approve that plan. The quick deadline is meant to get money into the hands of creditors faster and under supervision by a new court-appointed financial professional. Federal lawmakers have tried twice before to make it easier for small businesses to survive using bankruptcy, but bankruptcy experts said neither effort was successful. A 2014 report from ABI's Chapter 11 Reform Commission found “significant and troubling issues” for small and middle-market companies. The legislation would also cut costs by eliminating the automatic appointment of an unsecured creditors committee, an oversight group that typically pressures company executives to get their firm out of bankruptcy quickly and put forth the most money possible toward repayment. Read more.

Click here to read the bill text.

Click here to read Sen. Grassley’s press release. 

Click here to read Chapter 11 Reform Commission Co-Chair Bob Keach’s statements on the introduction of the legislation.