Document Type
Research Memorandum
Publication Date
2024
Abstract
(Excerpt)
The Small Business Reorganization Act of 2019 ("SBRA") created Subchapter V of title 11 of the United States Code (the "Bankruptcy Code"). Subchapter V provides an "expedited process for small business debtors to reorganize quickly, inexpensively, and efficiently." To be eligible under Subchapter V, a debtor must satisfy the four requirements listed in section 1182(1) of the Bankruptcy Code. However, even if all four requirements are met, there are four exceptions that exclude a debtor from Subchapter V eligibility. In several instances, creditors have argued that these requirements are continuing obligations, so the debtor’s post-petition actions can revoke their eligibility. In contrast, a debtor often contends that its eligibility is determined as of the petition date, and any subsequent action would not affect its eligibility for relief under Subchapter.
This memorandum explores if Subchapter V eligibility is determined on the petition date, or if the obligations are continuing. Part I examines the eligibility requirements of Subchapter V listed in section 1182(1) of the Bankruptcy Code. Part II examines the exceptions that exclude a debtor from eligibility.