Enacted via the Small Business Reorganization Act ("SBRA") in 2019, Subchapter V streamlines the reorganization process, allowing small business debtors to file bankruptcy in a timely and cost-effective manner. The goal behind the legislation is to encourage reorganizations, which will generally result in creditors receiving a higher distribution than in a liquidation and more small businesses surviving. Section 1182(1) of title 11 of the United States Code (the "Bankruptcy Code") limits those who can file a Subchapter V case to a "small business debtor" who does not own a "single asset real estate" project ("SARE"). Thus, if the debtor is determined to be a SARE project, the debtor cannot reorganize under Subchapter V.
This memorandum explores whether ownership of a single hotel constitutes a SARE project and therefore whether an owner of such hotel is eligible for reorganization under Subchapter V of Chapter 11 of the Bankruptcy Code.