Understanding Bankruptcy 10/17/2019

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BY MICHAEL A. CIBIK, ESQ.
AMERICAN BANKRUPTCY BOARD CERTIFIED

Question: What is a Chapter 11(v) bankruptcy?

Answer: In the new year, businesses in debt will have new options to help keep the doors open and get debt relief.

Last month, President Trump signed a bipartisan bill into law that amends Chapter 11 of the bankruptcy code to allow businesses with less than $2.7 million in debt to file a special reorganization plan, which will be known as a Chapter 11(V). Until now, a business’s only option was to file either a regular Chapter 11, which can be costly, or file a more affordable Chapter 7, which requires them to close up shop.

A Chapter 11(V) is a more-affordable solution because the bankruptcy estate is administered by a standing trustee, similar to a consumer Chapter 13 case. Additionally, there is no creditors’ committee, which makes the case less complex.

The new law takes effect in February 2020.

Next Week’s Question: Can I give a creditor preference in a bankruptcy?

Michael A. Cibik, Esquire
www.ccpclaw.com
ccpc@ccpclaw.com
215-735-1060

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