The Small Business Reorganization Act of 2019, which President Trump signed into law last month and will go into effect this February, is expected to have a significant impact on struggling small businesses, according to a commentary in the Philadelphia Inquirer. That is because the new law will give businesses with less than $2,725,625 in debts more time (90 days) to file a reorganization plan with easier rules for extending. Debts will no longer be required to be paid in full for the business owner to retain ownership of a company. Instead, the owner will have to abide by a new formula for payback that projects disposable income over a period of three to five years. There will be less red tape because business owners will now be able to appoint a “standing trustee” instead of a credit committee to oversee their reorganization process. There’s also a new way for determining the owners’ and creditors’ equity interests, based on what is “fair and equitable.” Most significant, according to the commentary, is that it will also be much harder for creditors to take away certain personal assets of the business owner, such as a home or place of residence. Also helping will be an extension of the time period for the payment of administrative expenses.
As they set national policy on issues such as climate change, tech monopolies, medical debt and income inequality, U.S. senators have glaring conflicts of interest, according to an article from Sludge and The Guardian. An analysis of personal financial disclosure data as of Aug. 16 has found that 51 senators and their spouses have as much as $96 million personally invested in corporate stocks in five key sectors: communications/electronics; defense; energy and natural resources; finance, insurance and real estate; and health. The majority of these stocks come from public companies, and some are private. Overall, the senators are invested in 338 companies. Congressional financial disclosures present investments in dollar ranges, not exact amounts, so all data in the report comes in ranges, some very wide. The median stock investment range is between $100,000 and $365,000, while the average range of the investments is between $551,000 and nearly $1,874,000. Not only are the senators far wealthier than most of their constituents, but they’re in prime position to increase their wealth via policymaking. It’s not illegal for members of Congress to have personal financial stakes in the industries on which they legislate, but such investments raise questions about lawmakers’ motivations. If a representative on the House Financial Services Committee owns hundreds of thousands of dollars worth of stock in Bank of America, how might this investment affect their questioning of Bank of America’s CEO in a hearing? Could it influence how they legislate and vote on banking issues?
ABI will hold a free media webinar today at 3 p.m. EDT featuring experts that will provide an overview of the new bankruptcy laws and how they will help financially distressed small businesses, disabled veterans and family farmers going forward. President Donald J. Trump on Aug. 23 signed the “Small Business Reorganization Act of 2019” (SBRA, H.R. 3311), “HAVEN Act” (H.R. 2938) and “Family Farmer Relief Act of 2019” (H.R. 2336) into law. Speakers on the webinar include:
• Robert J. Keach of Bernstein, Shur, Sawyer & Nelson (Portland, Maine) to discuss SBRA. Keach testified on ABI’s behalf in support of H.R. 3311, H.R. 2938 and H.R. 2336 before the House Judiciary Committee Subcommittee on Antitrust, Commercial and Administrative Law on June 25.
• Kristina Stanger of Nyemaster Goode, P.C. (Des Moines, Iowa) and Jessica Hopton Youngberg of the Veterans Legal Services clinic at the New England Center & Home for Veterans in Boston, both members of ABI's Veterans' Affairs Task Force, will discuss the HAVEN Act.
• Joseph A. Peiffer of Ag & Business Legal Solutions (Cedar Rapids, Iowa) and Donald L. Swanson of Koley Jessen (Omaha, Neb.), both with more than 30 years of experience in bankruptcy and agricultural law, will discuss the Family Farmer Relief Act.
The moderator for the webinar will be ABI Executive Director Samuel J. Gerdano. To register to attend the webinar today, please click here.
President Donald J. Trump on Friday signed the Small Business Reorganization Act of 2019 (H.R. 3311), HAVEN Act (H.R. 2938) and Family Farmer Relief Act of 2019 (H.R. 2336) into law. The bipartisan bills, which ABI testified in support of in June, passed the House in late July and the Senate on August 1.
H.R. 3311, the “Small Business Reorganization Act of 2019” (SBRA), which will take effect in February 2020, adds a new subchapter V to chapter 11, providing a better path for small businesses to successfully restructure, reduce liquidations, save jobs and increase recoveries to creditors while recognizing the value provided by the entrepreneur. It adopts the current definition of a “small business debtor” as a person in commercial or business activity with aggregate or noncontingent liquidated secured and unsecured debts as of its bankruptcy filing date of not more than $2,725,625. It is estimated that about half the chapter 11 cases filed today could qualify for subchapter V treatment. Introduced on June 18 by Reps. Ben Cline (R-Va.), David Cicilline (D-R.I.), Doug Collins (R-Ga.) and Steve Cohen (D-Tenn.), the SBRA is inspired by the work of the National Bankruptcy Conference and ABI’s Commission to Study the Reform of Chapter 11. A bipartisan companion bill (S. 1091) was introduced on April 9 in the Senate by Sen. Charles Grassley (R-Iowa). Click here to read ABI’s press release.
H.R. 2938, the “Honoring American Veterans in Extreme Need Act of 2019” (HAVEN Act) was introduced on May 23 in the House by Reps. Lucy McBath (D-Ga.) and Greg Steube (R-Fla.) to exclude VA and DoD disability payments from the monthly income calculation used for bankruptcy means testing. The bill was included in the National Defense Authorization Act, which passed on June 27. ABI Veterans Affairs Task Force Member Holly Petraeus, a former assistant director of the Consumer Financial Protection Bureau, testified in favor of the bill on behalf of the Task Force before the House Judiciary Committee. ABI’s Commission on Consumer Bankruptcy also endorsed the provision. A bipartisan companion bill (S. 679) was introduced on March 6 in the Senate by Sen. Tammy Baldwin (D-Wis.). Click here to read ABI’s press release.
H.R. 2336, the “Family Farmer Relief Act of 2019” was introduced on April 18 in the House by Rep. Antonio Delgado (D-N.Y.) to update chapter 12 of the U.S. Bankruptcy Code to reflect the economic challenges facing distressed farmers. Chapter 12 was added to the Bankruptcy Code in 1986 to provide reorganization relief to family farmers and fishermen to more properly handle this specialized area of bankruptcy law. Farm sizes have increased substantially since 1986; meanwhile, net farm income has declined since 2013. A survey released on Aug. 15 by the Federal Reserve Bank of Chicago found that Midwest bankers were reporting that the percentage of farm loans their customers were having problems repaying hit a 20-year high in the second quarter of this year. The debt limit for chapter 12 filings was $4.3 million; H.R. 2336 raises this limit to $10 million. A bipartisan companion bill (S. 897) was introduced on March 27 in the Senate by Sen. Charles Grassley (R-Iowa), the author of chapter 12. Click here to read ABI’s press release.
