Benefits for Creditors Included in Small-Business Bankruptcy Rules

A popular bankruptcy law created by Congress known as Subchapter V was implemented about five years ago to make it easier and more affordable for small businesses to declare bankruptcy and continue operating. The aim was to help these businesses shed debt and stay afloat. However, some critics, including banking trade groups, argue that the law could potentially limit or restrict the rights of creditors.

A task force at the American Bankruptcy Institute conducted a study to examine how small businesses and creditors have been impacted by the program. The future of the program is uncertain, as certain pandemic-era modifications are set to expire this summer unless Congress takes action to extend them.

The Subchapter V program has been seen as a valuable tool for small businesses facing financial challenges, but concerns have been raised about its potential impact on creditors. It will be important for policymakers to carefully consider these issues as they decide the future of the program.