A Chapter 11 Makeover: Timely Revisions to the Bankruptcy Code to Assist Small Businesses Through Crises
Matthew J. Razzano*
Rarely does Congress act proactively. But with the passage of the Small Business Reorganization Act (SBRA) in 2019, the legislature may have—unknowingly at the time—saved many small businesses from the devastating economic effects of the coronavirus. For years, critics have bemoaned the Bankruptcy Code’s (Code) rigid framework for reorganizing financially distressed companies—specifically its one-size-fits-all treatment of the corner store and the Fortune 500 conglomerate. Yet the SBRA attempted to streamline the lengthy and costly reorganization process, creating a fast-track path for small businesses in Chapter 11.
This Essay argues that while Congress may have gotten lucky in amending the Code prior to a flood of pandemic-induced small business bankruptcies, Congress can make additional changes to better accommodate these struggling entrepreneurs. Part II discusses historical issues with the Code’s treatment of small businesses and the stress placed upon these owners during the coronavirus pandemic. Part III introduces the provisions of the SBRA. And Part IV addresses additional changes needed to holistically improve the bankruptcy system for small business owners.