What is the “middle market”? Typically, this segment of the US economy is defined as companies with annual revenues between $ 10 million and $ 1 billion. Collectively, they are an economic powerhouse: According to the National Center for the Middle Market, there are approximately 200,000 such companies in the United States, with combined annual revenues of over $ 10. trillion. Of course, these businesses – bigger than the typical ‘mom and pop’ store, but most are still private or closed businesses – are not immune to financial distress, whether induced by COVID-19. -19 or not, and at some point in the life cycle of the business may have to undergo financial restructurings, loan restructurings or bankruptcy proceedings. Unfortunately, the middle market has been particularly affected by the rising costs of Chapter 11 bankruptcy in recent years, to the point that for some companies, it has paradoxically become too expensive to file for bankruptcy.

In response to widespread criticism that Chapter 11 had become too expensive and complex for all businesses except the largest, Congress enacted the Small Business Reorganization Act of 2019 (SBRA), which is entered into force in February 2020. The SBRA added “Subchapter V”, 11 USC §§1181-95, to Chapter 11 of the Bankruptcy Code. Despite its official name, the Small business Reorganization Act – the law colloquially known as “Subchapter V” may offer a streamlined reorganization vehicle for some mid-market companies.

Sub-chapter V Advantages



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