The general purpose of Chapter 11 of the Bankruptcy Code is to
allow a reorganization either for an individual or a company.
Several years ago, to encourage smaller companies and individuals
who engage in business activities to reorganize, Congress enacted
the Small Business Reorganization Act (the “SBRA” known
as Subchapter V) which is designed to allow a more expeditious,
efficient reorganization process with a quicker exit from
bankruptcy. Initially, companies with less than $2.75 million in
debt could utilize Subchapter V to reorganize through an expedited
process. As the pandemic took over, Congress increased the debt
limit to $7.5 million, enabling many more companies to take
advantage of Subchapter V. Some of the advantages of Subchapter
V:
