COVID-19, SBRA, and Business Bankruptcy: What You Need to Know
COVID-19 has impacted all of us. In addition to the health scare, the pandemic has changed our routines, affected our relationships, and made us worry about the future. Small business owners are suffering the most. The large retailers and restaurant chains will likely bounce back, able to carry on as though nothing really happened. But the local shops, restaurants, and other small business owners and entrepreneurs – including those in the Twin Cities – might never recover. And some will have to consider business bankruptcy.
A recent survey of 300,000 small business owners across the country found that COVID-19 has had a “devastating” impact on small businesses revenue. The U.S. Chamber of Commerce estimates that 40 percent of the 30 million small businesses in America will permanently shut down in the next six months because of the coronavirus pandemic.
At the same time, closing a business doesn’t mean that bills and debt disappear along with it. So the nightmare continues.
Aiming to help provide businesses and individuals with options for financial survival, the Small Business Reorganization Act of 2019 (SBRA) went into effect in February of this year. This legislation provides for a new type of business bankruptcy: Subchapter 5. Subchapter 5 of the U.S. Bankruptcy Code now gives small business debtors a quicker and more flexible timeline for completing the bankruptcy process than traditional Chapter 11 filings. In addition, the CARES Act, as part of the federal stimulus package, tweaks the SBRA so that more small businesses are eligible for Subchapter 5 relief.
The CARES Act also makes minor revisions to chapters 7 and 13 consumer bankruptcies; including, allowing debtors in those chapters to exclude certain coronavirus-related payments from being treated as income for bankruptcy purposes.
Minneapolis Business Bankruptcy Attorney
The business bankruptcy process – Chapter 11 – can be overwhelming. But in many cases it can be the solution your company needs to move forward. The business bankruptcy attorneys at Edina’s MLG Bankruptcy are experienced at business bankruptcy, loan modification, and debt restructuring. In addition, our real estate attorneys are skilled in building a strong foreclosure defense for both business and consumer clients.
Our legal team helps Minnesotans across the Twin Cities save their businesses and homes, reorganize their debt, and plan for a stronger future. We are here to help. Give us a call at 952.841.9000 or contact us here to schedule a free consultation via phone or video chat.
What Is Chapter 11?
Chapter 11 is a form of bankruptcy that involves a reorganization of a business’ affairs, debts, and assets. The terms are subject to the business owners’ fulfillment of his obligations under the plan of reorganization. Chapter 11 is complex, however, in most cases, a business in Chapter 11 can continue operations. It’s important to have an experienced business bankruptcy lawyer guiding you through the process.
The CARES Act: What it Means for Small Businesses
As part of the CARES Act, signed into law in late March as the pandemic was forcing many businesses and people into lockdown mode, modifies Subchapter 5. The bill expands Chapter 11 eligibility to businesses with up to $7.5 million in debt. Subchapter 5 could help up to 70 percent of all businesses that might file for bankruptcy.
The CARES Act includes important temporary provisions for bankruptcy cases, meaning they essentially have sunset clauses. Each will expire in one year unless Congress votes to extend the deadline. Regardless, the changes may make Chapter 11 reorganization more attractive for certain businesses who need access to relief from aggressive creditors.
Get Help Today
Have a question about the CARES Act, business bankruptcy, foreclosure defense, or any legal matter? Contact the Edina law firm of MLG Bankruptcy. Our Twin Cities business bankruptcy attorneys are ready to help you take back control and give you some relief. Call 952.841.9000 today.
About MLG Bankruptcy
At MLG Bankruptcy, we don’t just counsel our clients. We invest in them.
Our attorneys have been serving the Edina and Twin Cities communities since 1974. Our attorneys provide personalized, cost-effective legal services.
Our experienced attorneys believe that relationships matter. Our lawyers appear regularly in state and federal court, in administrative hearings, and in various alternative dispute resolution forums, including mediation and arbitration.
MLG Bankruptcy is a highly skilled Minnesota law firm for all of your debt relief needs. We advocate for our clients with professionalism, vigor, and with a results-driven approach.
Let’s get started today! For more information or to book a free consultation, call 952.841.9000 or fill out our confidential contact form.