A new bankruptcy subchapter that went into effect in February could become massively important to small businesses across the country in the coming months.
Earlier this year, Congress approved a new bankruptcy subchapter called Chapter 5, which is designed to allow reorganization for smaller businesses that cannot afford to file for Chapter 11 bankruptcy. With thousands of companies around the country expected to file for bankruptcy due to the economic impact of Covid-19, the new subchapter could be a lifeline for many small businesses.
“When you look at the debt load cap [under subchapter 5], it does encompass a lot of the businesses here in Tampa Bay,” said Stephanie Lieb, a shareholder and bankruptcy attorney with Trenam Law in Tampa.
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