Small Businesses will Benefit from the Chapter 11 Provisions
Update 3/29/2021: This provision has been extended to June 2022.
New legislation to extend an important provision to the CARES Act was just introduced. Should it be passed, the Subchapter V bankruptcy provision will be extended to March 27, 2022. This is good news for small businesses.
The CARES Act contained the Subchapter V provision for chapter 11 bankruptcies which currently expires on March 26, 2021. It includes provisions that are beneficial to small business owners including increasing the debt limit from $2,725,625 to $7.5 million to take advantage of chapter 11 filing.
There are other provisions included but the debt limit increase is a major one for small businesses. Below is a summary of what would be extended:
**Source of Chart: American Bankruptcy Institute
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