The Small Business Reorganization Act of 2019, legislation recently introduced by U.S. Sen. Thom Tillis (R-NC), would give struggling businesses the tools they need to more easily work through the process of filing for bankruptcy.
Sen. Tillis introduced the bipartisan bill, S. 1091, with sponsor U.S. Sen. Chuck Grassley (R-IA), and original cosponsors U.S. Sens. Joni Ernst (R-IA) and Sheldon Whitehouse (D-RI) on April 9. The bill, which was crafted with input from several bankruptcy organizations and the U.S. Trustee, would streamline existing bankruptcy procedures to help small businesses successfully reorganize their debts.
“The current one-size-fits-all method that dictates the Chapter 11 bankruptcy process unfairly disadvantages small businesses. This bipartisan legislation is a common sense approach to streamlining existing bankruptcy procedures while also providing new tools for small businesses looking for a successful path through restructuring,” said Sen. Tillis.
The Chapter 11 section of the bankruptcy code was mainly designed for large companies in need of complex business reorganizations, Tillis’ office noted.
“Despite containing several provisions specifically focused on small business debtors, there has been a significant amount of research showing that Chapter 11 may still create difficulties for small businesses, including high costs, monitoring deficits, and procedural roadblocks,” according to a summary of the bill released by the senators.
Under the bill, a small business debtor would more easily be able to negotiate a reorganization while keeping control of the business. Additionally, the legislation calls for reducing unnecessary procedural burdens and costs, and increasing oversight through the appointment of trustees who would ensure that business reorganizations stay on track, the summary said.
Tillis’ office said U.S. Reps. Doug Collins (R-GA) and David Cicilline (D-RI) were planning to introduce companion legislation in the U.S. House.