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ARTICLE · 08 NOVEMBER 2020

A Cogent Opposing View On SBRA Flexibility

Patterson Belknap Webb & Tyler LLP
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Congress sought to balance those benefits and advantages with the interests of creditors by, among other things, imposing deadlines for benchmarks within the case.

United StatesInsolvency/Bankruptcy/Re-Structuring
David Dykhouse
David Dykhouse

I don't know if Congress foresaw, when it enacted new Subchapter V of Chapter 11 of the Code1 in the Small Business Reorganization Act of 2019 ("SBRA"), that debtors in pending cases would seek to convert or redesignate their cases as Subchapter V cases when SBRA became effective on February 19, 2020, but it was foreseeable. The benefits and advantages of Subchapter V to the debtors entitled to use it2 were certain to attract not just new filings but pending cases, especially cases commenced during SBRA's long "180-day runway to effectiveness." 3

Congress sought to balance those benefits and advantages with the interests of creditors by, among other things, imposing deadlines for benchmarks within the case. For example, the Code as amended by SBRA requires the Bankruptcy Court to hold a status conference within 60 days of the petition date4 and the debtor to file a reorganization plan within 90 days.5 These deadlines have been a major issue addressed by the courts

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