Grassley Bill Removing Red Tape for Small Businesses in Bankruptcy Becomes Law
Aug 26, 2019
BUTLER COUNTY, IOWA – Legislation authored by Senator Chuck Grassley (R-Iowa) aimed at reducing debt reorganization burdens for small businesses was signed into law by President Trump Friday. The Small Business Reorganization Act streamlines existing debt reorganization procedures and reduces certain small business bankruptcy requirements intended for major corporations.
“American businesses come in all shapes and sizes. It’s time that the bankruptcy code reflect this reality. Mom and pop shops shouldn’t face the same debt reorganization challenges as major companies with armies of accountants. The Small Business Reorganization Act takes into account the unique needs of small businesses and streamlines existing reorganization processes. A well-functioning bankruptcy system, specifically for small businesses, allows businesses to reorganize, preserve jobs, maximize the value of assets and ensure the proper allocation of resources. By signing this bill, President Trump is again making good on his promise to promote American small businesses,” Grassley said.
Chapter 11 in the bankruptcy code was designed for administering complex business reorganizations involving multi-million dollar companies. Though several provisions specifically focus on small business debtors, a significant amount of research shows that Chapter 11 may still create difficulties for small businesses, including high costs, deficits and procedural roadblocks. The legislation, authored by Grassley, addresses these issues by adding a new subchapter V to Chapter 11 to streamline the bankruptcy process for small business debtors. More information on this bill is available HERE.