Interim Rules Adopted to accommodate the Small Business Reorganization Act of 2019
$2.725 million or less of business debt may reorganize under a new subchapter of Chapter 11 that eliminates some of the most cumbersome aspects of Chapter 11.
Eliminates the absolute priority rule. Allowing individuals to retain non-exempt assets, and business owners to retain equity, even if all creditors are not paid in full.
Eliminates:
- Rules requiring the approval of comprehensive disclosure statements prior to solicitation of votes for confirmation
- Rules allowing creditors to form oversight committees whose administrative expenses must also be paid at confirmation
- Rules allowing creditors and other parties to propose competing plans of reorganization
- exception to the rule prohibiting debtors from modifying home mortgages in bankruptcy;
- a small business debtor now may modify a home mortgage that is not a purchase-money mortgage and that was given in connection with the debtor’s business,
- e.g., small business loans secured with a second or third mortgage on the residence.
- a small business debtor now may modify a home mortgage that is not a purchase-money mortgage and that was given in connection with the debtor’s business,
- real estate investors qualify as a small business debtors
- small business debtors may pay administrative expense claims over several years