The Small Business Reorganization Act of 2019 (“SBRA”) became effective on February 19, 2020, after being enacted by Congress at blazing speed. Indeed, the legislation was first introduced into the House of Representatives on June 18, 2019, was received by the Senate on July 24, 2019 and was signed by the President on August 23, 2019. The SBRA is intended to help small businesses restructure their debts in bankruptcy more effectively.
In a unanimous decision written by Justice Neil Gorsuch (Rodriquez v. FDIC No 18-12690), the Supreme Court vacated a decision by the U.S. Court of Appeals for the Tenth Circuit (In reUnited Western Bancorp, Inc., 914 F. 3d 1262 (10th Cir, 2019)) that awarded a federal income tax refund of a failed bank to the Federal Deposit Insurance Corporation as receiver.
Two recent decisions involving health care companies demonstrate how reorganization under Chapter 11 of the Bankruptcy Code1 can be used to manage large liabilities.
Bankruptcy Rule 8002 and Federal Rule 58 can sometimes look like this. Carolina and Khaled have a much simpler solution.
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Key Notes:
The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of a consumer’s Truth in Lending Act (TILA) claim for lack of subject matter jurisdiction, holding that the claim was barred by the jurisdiction-stripping provision of the federal Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).
A copy of the opinion in Shaw v. Bank of America is available at: Link to Opinion.
On August 23, 2019, Congress passed, and the President signed into law, Public Law 116-54 known as the “Small Business Reorganization Act of 2019” or “SBRA.” It takes effect on February 19, 2020. The SBRA adds a provision (namely subchapter V) to Chapter 11 of the U.S. Bankruptcy Code to make the reorganization process less complicated, and thus less expensive, for small businesses. The Act generally defines a small business as a debtor with less than approximately $2.7 Million of secured and unsecured debt.
Today, February 19, 2020, the Small Business Reorganization Act of 2019 (SBRA) becomes effective. Signed into law on August 23, 2019, this new subchapter to Chapter 11 reorganization is available to address problems encountered by small business debtors in reorganization under the provisions of the United States Bankruptcy Code.
SBRA is intended to facilitate the reorganization of a small business, with the goal of making small business bankruptcy proceedings more efficient and economical. The key components of SBRA are as follows: