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The U.S. Trustee Program has some 250 new trustees at the ready to assist with small business cases as a change in bankruptcy law intended to make it easier for smaller companies to reorganize goes into effect, Bloomberg Law reported. The Small Business Reorganization Act of 2019, signed into law in August, adds a subchapter to the bankruptcy code’s chapter 11 to cut the legal costs incurred by qualifying small corporate debtors, defined as those with about $2.7 million of debt or less. It also expedites the restructuring process and allows owners of the bankrupt company to retain a stake.“The SBRA represents an innovative effort to expedite and reduce the cost of bankruptcy for small business debtors to reorganize their debts and save their businesses,” said USTP Director Cliff White. “The USTP has spent the past six months preparing for its implementation and is committed to ensuring that the law is carried out as intended.” In addition to the selection of the new subchapter V trustees, the USTP developed a comprehensive manual and handbook to guide staff and subchapter V trustees in carrying out their new SBRA responsibilities; provided extensive training to staff, subchapter V trustees, bankruptcy professionals, and others interested in the new law; and coordinated with the bankruptcy courts on administrative issues to ensure a successful implementation. Click here to read the USTP's press release. 

For news, analysis and events related to SBRA, be sure to visit ABI’s SBRA Resources webpage.

Until recently, small-business owners in financial distress found it difficult, if not impossible, to seek bankruptcy protection, according to a commentary in Crain's Cleveland Business. The ability to seek relief from adverse creditor action and successfully reorganize their businesses was hampered by the costly and onerous requirements that characterized a traditional reorganization under chapter 11 of the Bankruptcy Code. The Small Business Reorganization Act of 2019 (SBRA) was enacted to address this dilemma. Signed into law by President Donald Trump in August 2019 as a subchapter to Chapter 11, the new act takes effect this month, providing welcome relief for thousands of small businesses that may have otherwise had to close their doors as a result of overwhelming debt. The SBRA is intended to provide a framework to streamline the reorganization of a small business, thereby expediting the reorganization process, reducing associated costs and removing traditional barriers that could limit a company's ability to successfully emerge from bankruptcy. Click here to read the full commentary. Read more. 

Get a comprehensive look at the important provisions of SBRA before it becomes effective on Feb. 19. Register for a FREE abiLIVE webinar on February 11. 

The growth of online lending has been a boon to hair salons, bakeries and other small businesses that don’t qualify for bank credit. Yet this tech-enabled source of credit can mire some in debt they can’t repay, raising concern about inadequate regulation, the Wall Street Journal reported. Some are extending credit at sky-high rates with opaque terms for costly fees and conditions, drawing comparisons with payday lenders who target consumers in need of quick cash, according to critics. “There is a significant number of bad actors who are mostly unregulated,” said Luz Urrutia, chief executive of Opportunity Fund, a California nonprofit that lends in lower-income communities. “They are really wreaking havoc across America’s small businesses.” Nearly a third of the small businesses surveyed applied for online loans in 2018, up from 19 percent in 2018, according to a Federal Reserve study. The market’s growth is driven by loans of less than $100,000, often as small as a few thousand dollars, according to experts.