What’s New in the Updated Small Business Reorganization Act?

The Small Business Reorganization Act (SBRA) became law on August 23, 2019, and went into effect on February 19, 2020. This is the first time that Congress has amended the Bankruptcy Code since 2005. The stated purpose of the act is to alleviate the costs traditionally associated with the bankruptcy process and improve the prospects for reorganization for small business debtors. See Legislative History, “H.R. 3311, the Small Business Reorganization Act of 2019” The SBRA requires at least 50 percent of the small business debtor’s debt to have arisen from commercial or business activities. Current section 101(51D) defines a “small business debtor” as one that has aggregate, noncontingent, liquidated, secured, and unsecured debts of $2,725,625 or less.