The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was just passed, giving more small businesses the opportunity for bankruptcy relief. As COVID-19 is wreaking havoc on small businesses around the globe, the US government is expanding assistance efforts to help keep them afloat.
The Small Business Reorganization Act (SBRA) of 2019, which went into effect on February 19, 2020, has been amended by the CARES Act so that small business owners with debt up to $7.5 million are able to obtain help via a chapter 11 reorganization under the US Bankruptcy Code. The previous limit was $2,725,625, so many more small businesses are now eligible with the increase. However, this change is only in effect for one year.
The SBRA created a new subchapter under chapter 11 of the Bankruptcy Code, known as subchapter 5. This new subchapter was meant to help small businesses have a less expensive reorganization option and one that is faster and more applicable to the needs these business owners face.
The CARES Act updated subchapter 5 so that more small businesses can benefit from these updated requirements for confirming a plan, and reorganization will usually be confirmed if a business uses all of its disposable income for three to five years to make their plan payments.
Filing business bankruptcies with NextChapter
As a bankruptcy attorney, you can provide assistance to businesses that have been affected financially by the COVID-19 pandemic. NextChapter has business filing capabilities and many features that help attorneys prepare and file bankruptcies for business debtors. Provide relief to businesses that need it most with NextChapter. Features we have for business cases include:
- Easy uploads and attachments: Upload lists of assets, payments, or partners as attachments instantly just by checking a box.
- Business income and expense form: P&L statements are automatically created in NextChapter for your business cases, and you can edit them at any time if expenses change.
- Client prefixes: Categorize similar business cases with a prefix so you can sort your business debtors by the “client prefix” filter, and reference jointly administered cases without a lot of scrolling.
- Sole proprietor businesses auto-saved: Entering a sole proprietor business in the Debtor Profile section will automatically be saved to the business-related section in the case.
- Save multiple creditors to multiple assets: Reduce double data entry and improve efficiency by saving multiple creditors to multiple assets in business cases.
- Filing capabilities for Chapter 11, Subsection 5. Just select Chapter 11BK when you create the case and you can then mark the case as a subsection Chapter 5 within the client profile
NextChapter will also be adding a feature that will allow simple intake for business cases with the MyChapter Client Portal. Benefits of this feature include:
- A secure link is provided for the business to input and upload documents necessary to prepare the case
- Intake is streamlined and quick for business bankruptcy attorneys
- Review and update the input as needed before the data is imported into NextChapter
- Lessens attorneys' workloads for business bankruptcy filings
Sign up for NextChapter today to use a business bankruptcy software that will help you help clients in need.