WASHINGTON – Reps. Doug Collins (R-Ga.), Tom Marino (R-Penn.) and David Cicilline (D-R.I.) andSenate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Sen. Sheldon Whitehouse (D-R.I.) have introduced the Small Business Reorganization Act. The bill will streamline existing bankruptcy procedures and provide new tools to increase small businesses’ ability to achieve successful restructurings.
“Small businesses are some of the best innovators in our local economies, and this bill would bring much-needed improvements to the bankruptcy code so that owner-operated businesses can recover from financial hardship and continue creating jobs,” Collins said.
“The Small Business Reorganization Act is a tremendous step forward in streamlining bankruptcy procedures. By reducing unnecessary procedural burdens, enhancing oversight, and increasing the debtors’ ability to negotiate; we will ensure quick and successful reorganization and provide small business’ the ability to restructure in a way that meets their needs. I thank my colleagues for their work on the introduction of this bill and urge for its timely consideration in both the House and Senate,” Marino said.
“Our economy depends on locally owned businesses to create good jobs, invest in our communities, and help hardworking Americans get ahead. The Small Business Reorganization Act is an important step to ensuring that our bankruptcy system works for everyone by giving financially distressed small businesses the tools they need for a fresh start,” Cicilline said.
“We’ve worked with the National Bankruptcy Conference, American Bankruptcy Institute and National Conference of Bankruptcy Judges to develop this legislation and have incorporated feedback from numerous stakeholders, ranging from commercial lenders to the U.S. Trustee,” Grassley said. “A well-functioning bankruptcy system, specifically for small businesses, allows businesses to reorganize, preserve jobs, maximize the value of assets and ensure the proper allocation of resources. To that end, I’ve been working to improve the bankruptcy code for decades and will continue that effort.”
“Small businesses form the backbone of the American economy. When these businesses are struggling, the bankruptcy process should give them a chance to reorganize to preserve jobs and boost local communities,” Whitehouse said. “I look forward to working with Chairman Grassley to pass this common-sense measure.”
Chapter 11 in the bankruptcy code was designed for administering complex business reorganizations involving multi-million dollar companies. Though several provisions specifically focus on small business debtors, a significant amount of research shows that Chapter 11 may still create difficulties for small businesses, including high costs, deficits and procedural roadblocks. The Small Business Reorganization Act will address these issues by adding a new subchapter V to Chapter 11. By reducing liquidations and increasing recoveries to creditors, the bill will lead to more successful restructurings.
Specifically, key provisions of the Small Business Reorganization Act will increase a debtor's ability to negotiate a successful reorganization and retain control of the business, reduce unnecessary procedural burdens and costs, increase oversight and ensure quick reorganization.
More information about H.R. 7190 can be found here.