Congress passed the Small Business Reorganization Act of 2019 (the “SBRA”) to benefit small businesses. The SBRA established a new framework within Chapter 11 of the Bankruptcy Code, known as subchapter V, which streamlines and simplifies the bankruptcy process for small businesses to allow them to restructure and exit bankruptcy in an expedited timeframe.Section 1182

BackgroundCongress passed The Small Business Reorganization Act of 2019 (the “SBRA”) for small businesses, currently defined as debtors with less than $7.5 million in debt. SBRA created a new Subchapter V, which can be used by both individual debtors or business entities, such as corporations, limited liability companies or partnerships (hereinafter “Business Entities”). While Congress

On April 19, 2023, the U.S. Supreme Court issued its opinion in MOAC Mall Holdings LLC v. Transform Holdco LLC, 598 U.S. (2023), reversing the Second Circuit decision and determining that the limitations on appeals of bankruptcy sale orders provided in section 363(m) of the Bankruptcy Code are not jurisdictional. Rather section 363(m) merely provides

On April 28, 2022, Central District of California Bankruptcy Judge Ernest M. Robles issued a decision regarding the eligibility of a debtor to proceed as a Small Business Debtor under Subchapter V of the Bankruptcy Code. In the decision, Judge Robles determined that the debtor, Phenomenon Marketing & Entertainment, LLC (“Phenomenon”), was not eligible to

Reaching an outcome in line with two other circuit courts, on February 16, 2022 the Fifth Circuit Court of Appeals permitted a Chapter 11 trustee to sell a debtor’s real property free and clear of the leasehold estates held by certain non-debtor lessees. See In re Royal Street Bistro, L.L.C., 2022 WL 499938 (5th Cir.

Congress originally conceived the new Subchapter V to “streamline the bankruptcy process by which small business debtors reorganize and rehabilitate their financial affairs.” The new Subchapter became effective on February 19, 2020, and the COVID-19 pandemic began in earnest less than a month later. The pandemic caused Congress to almost triple the Subchapter V debt

On January 14, 2021, the Supreme Court held in City of Chicago v. Fulton that a creditor does not violate the automatic stay by merely retaining possession of the debtor’s property after a bankruptcy filing. The City of Chicago routinely impounded vehicles owned by drivers with outstanding parking tickets and other fines. The City refused