ANALYSIS: Small Change to SBRA Makes a Big Bankruptcy Difference

Small business bankruptcies filed under the new Subchapter V accounted for approximately 18% of all Chapter 11 cases filed in 2020 through Oct. 31, according to calculations using Bloomberg Law Dockets and statistics from Epiq. Expanding Subchapter V eligibility could help even more small businesses by allowing them a more direct path to restructuring during this economic downturn.

In the fall of 2019, Congress made several changes to the Bankruptcy Code. One of those changes, the Small Business Reorganization Act (SBRA), created a new subchapter of Chapter 11—Subchapter V—providing a simplified, equity-friendly, and potentially less expensive route to bankruptcy ...