Current:Home > MySmall businesses could find filing for bankruptcy more difficult as government program expires -Core Financial Strategies
Small businesses could find filing for bankruptcy more difficult as government program expires
View
Date:2025-04-17 10:00:12
NEW YORK (AP) — A type of bankruptcy protection filing that made it easier for small businesses to seek relief has expired, which will complicate filing for small businesses with more than $3 million in debt.
The filing type, known as Subchapter V, is cheaper and less time-consuming than the traditional Chapter 11 bankruptcy filing.
The rule went into effect in 2020 as part of the Small Business Reorganization Act. It let small businesses with less than $2.75 million in debt file under the subchapter. That debt limit was extended to $7.5 million in March 2020 amid the pandemic for one year — and that was extended two more times.
A bill to make the debt limit permanent failed, so the debt threshold reverted to $3 million (the original debt limit adjusted for inflation), on June 21.
Subchapter V filing imposes shorter deadlines for filing reorganization plans, allows for greater flexibility in negotiating restructuring plans with creditors and doesn’t require the payment of U.S. Trustee quarterly fees. A trustee is appointed for each case and the trustee works with the small business debtor and creditors to facilitate a reorganization plan.
According to data compiled by the Justice Department’s U.S. Trustee Program, between 2020 and 2023, Subchapter V filers had 51% of plans confirmed by a judge, compared with 31% of plans from filers of other types of bankruptcy protection. Subchapter V filers had half the percentage of plans dismissed compared with other filers, and a shorter time to confirmation.
veryGood! (9)
Related
- Taylor Swift makes surprise visit to Kansas City children’s hospital
- Why TikTokers Francesca Farago and Jesse Sullivan Want to Be Trailblazers in the LGBTQ+ Community
- Allow Homicide for the Holidays' Horrifying New Trailer to Scare You Stiff This Summer
- Pregnant Claire Holt Shares Glowing Update on Baby No. 3
- Federal court filings allege official committed perjury in lawsuit tied to Louisiana grain terminal
- The 26 Best Deals From the Nordstrom Half Yearly Sale: 60% Off Coach, Good American, SKIMS, and More
- Wave of gun arrests on Capitol Hill, including for a gun in baby stroller, as tourists return
- RHOBH's Kyle Richards Shares Update on Kathy Hilton Feud After Recent Family Reunion
- Taylor Swift makes surprise visit to Kansas City children’s hospital
- How 90 Day Fiancé's Kenny and Armando Helped Their Family Embrace Their Love Story
Ranking
- The Daily Money: Spending more on holiday travel?
- Alaska Tribes Petition to Preserve Tongass National Forest Roadless Protections
- TikTok forming a Youth Council to make the platform safer for teens
- Heat blamed for more than a dozen deaths in Texas, Louisiana. Here's how to stay safe.
- Average rate on 30
- Fourth of July flight delays, cancellations contributing to summer travel woes
- Grimes Debuts Massive Red Leg Tattoo
- Coal Ash Contaminates Groundwater at 91% of U.S. Coal Plants, Tests Show
Recommendation
What to know about Tuesday’s US House primaries to replace Matt Gaetz and Mike Waltz
Arctic Drilling Ruling Brings Hope to Native Villages, Subsistence Hunters
Return to Small Farms Could Help Alleviate Social and Environmental Crises
Solar Boom in Trump Country: It’s About Economics and Energy Independence
Nevada attorney general revives 2020 fake electors case
Can air quality affect skin health? A dermatologist explains as more Canadian wildfire smoke hits the U.S.
10 Giant Companies Commit to Electric Vehicles, Sending Auto Industry a Message
Jedidiah Duggar and Wife Katey Welcome Baby No. 2