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DISTRESSED DAILY: Retailers Get More Rent Leverage in Bankruptcy

June 10, 2022, 12:04 PM

A popular bankruptcy program that helps closely held businesses to restructure got a boost this week when Congress increased petitioners’ debt limit to $7.5 million, a change that may aid mid-sized retailers shed unprofitable stores.

If President Biden signs it into law, the plan lets more companies use the so-called Subchapter V program, a quicker and cheaper alternative to a traditional Chapter 11 case.

The rules provide a government-appointed trustee with limited powers to assesses a company’s finances and help reach consensus with debtholders on payment. There are no official creditor committees for a company to battle, and owners don’t ...