ATTORNEY NOTES SUBCHAPTER V
The Small Business Reorganization Act of 2019 (“SBRA”), Pub. L. No. 116-54, effective February 19, 2020, provides that a small business debtor may elect at the time of filing to proceed under a new subchapter V of chapter 11. The legislative purpose of the SBRA was to provide a fast track for small businesses to confirm a consensual plan with the assistance of a private trustee, a subchapter V trustee. SBRA’s key provisions seek: to increase a debtor’s ability to negotiate a successful reorganization while retaining control of the business; to reduce “unnecessary procedural burdens and costs” by eliminating the creditors’ committee and disclosure statement requirements for the plan of reorganization; and to increase oversight and ensure quick reorganizations.
In each case in which a small business debtor elects to proceed under SBRA, a subchapter V trustee is appointed immediately to perform certain duties in connection with the administration of the case. In general, among the most important subchapter V trustee duties are assessing the financial viability of the small business debtor, facilitating a consensual plan of reorganization, and helping ensure that the debtor files or submits complete and accurate financial reports. The subchapter V trustee also may be required to act as a disbursing agent for the debtor’s payments to creditors under the confirmed plan of plan reorganization. In certain instances, the subchapter V trustee may be required to administer property of the debtor’s bankruptcy estate for the benefit of creditors. SBRA prescribes the trustee’s specific case administration duties, which are hereafter discussed in greater detail.*
*Handbook for Small Business Chapter 11 Subchapter V Trustees DOJ February 2020
The Small Business Reorganization Act of 2019 (“SBRA”), Pub. L. No. 116-54, effective February 19, 2020, provides that a small business debtor may elect at the time of filing to proceed under a new subchapter V of chapter 11. The legislative purpose of the SBRA was to provide a fast track for small businesses to confirm a consensual plan with the assistance of a private trustee, a subchapter V trustee. SBRA’s key provisions seek: to increase a debtor’s ability to negotiate a successful reorganization while retaining control of the business; to reduce “unnecessary procedural burdens and costs” by eliminating the creditors’ committee and disclosure statement requirements for the plan of reorganization; and to increase oversight and ensure quick reorganizations.
In each case in which a small business debtor elects to proceed under SBRA, a subchapter V trustee is appointed immediately to perform certain duties in connection with the administration of the case. In general, among the most important subchapter V trustee duties are assessing the financial viability of the small business debtor, facilitating a consensual plan of reorganization, and helping ensure that the debtor files or submits complete and accurate financial reports. The subchapter V trustee also may be required to act as a disbursing agent for the debtor’s payments to creditors under the confirmed plan of plan reorganization. In certain instances, the subchapter V trustee may be required to administer property of the debtor’s bankruptcy estate for the benefit of creditors. SBRA prescribes the trustee’s specific case administration duties, which are hereafter discussed in greater detail.*
*Handbook for Small Business Chapter 11 Subchapter V Trustees DOJ February 2020