U.S. Reps. Ben Cline (R-VA) and Laurel Lee (R-FL) recently unveiled a bill to modify certain federal bankruptcy eligibility requirements for America’s small businesses.
The bipartisan Bankruptcy Threshold Adjustment Act of 2026, H.R. 7730, which Rep. Cline sponsored on Feb. 26 with three original cosponsors, including Rep. Lee and U.S. Rep. Lou Correa (D-CA), would permanently raise the small business reorganization threshold for Chapter 11 to $7.5 million.
“The Bankruptcy Threshold Adjustment Act will give small businesses the certainty they need to reorganize, restructure, and keep operating when challenges arise,” Rep. Cline said recently. “By permanently raising the eligibility threshold, we’re ensuring more job creators can access a streamlined and affordable bankruptcy process that helps them stay open, protect paychecks, and meet their obligations.”
If enacted, H.R. 7730 also would ensure that the bankruptcy system remains self-supporting and that its costs are fairly borne by those who use it, according to a bill summary provided by the lawmakers.
“Just as importantly, this bipartisan bill maintains the integrity of our bankruptcy system by keeping it self-supporting and fair for all who rely on it,” added Rep. Cline.
“When small businesses face financial distress, they should have a practical path to reorganize and continue operating,” Rep. Lee added. “This legislation permanently restores the $7.5 million debt threshold so more small and family-owned businesses can access a streamlined restructuring process, preserve jobs, and continue serving their communities. I’m pleased to support this bipartisan effort to provide greater certainty for small businesses.”
Rep. Correa pointed out that H.R. 7730 would make a streamlined and more cost-effective process accessible to more businesses, enabling them to settle their debts and continue serving their customers.
“With the heavy burdens that Main Street already faces in this economy,” he said, “we need to give them opportunities to not only survive but thrive.”
The measure is under consideration by the U.S. House Judiciary Committee.