COVID-19 Bankruptcy Relief Extension Act Passed, Signed

As we previously reported, the CARES Act temporarily expanded the number of small businesses eligible for relief under the Small Business Reorganization Act of 2019 (the “SBRA”). That expanded eligibility was set to expire on March 27, 2021.  On February 25, 2021, Senators Dick Durbin (D-IL) and Chuck Grassley (R-IO) introduced the bipartisan COVID-19 Bankruptcy Relief Extension Act. Congress ultimately passed an amended version of the legislation, and on March 27, the President signed it into law.

The SBRA gives small businesses new forms of bankruptcy relief that were not previously available to them under federal law, including the ability for business owners to retain ownership of their businesses without first paying their creditors in full. Under the original act, a small business could qualify for relief under the SBRA provided it had no more than $2,725,635 in aggregate secured and unsecured debt. To help small businesses address the impacts of COVID-19, the CARES Act temporarily expanded this limit to $7,500,000. The COVID-19 Bankruptcy Relief Extension Act renews the $7,500,000 expanded debt limit for another year through March 27, 2022.

If your business is in need of a solvency solution, the SBRA is powerful tool in your arsenal. If you have any questions regarding the SBRA or other relief options currently available to small businesses, please reach out to the professionals in Ice Miller’s Bankruptcy and Restructuring Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.