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  • Interim Rules Adopted to accommodate the Small Business Reorganization Act of 2019
  • Interim Rules Adopted to accommodate the Small Business Reorganization Act of 2019


    Interim Rules Adopted to accommodate the Small Business Reorganization Act of 2019

    Interim Rules Adopted to accommodate the Small Business Reorganization Act of 2019

    Redline Rule Changes

    $2.725 million or less of business debt may reorganize under a new subchapter of Chapter 11 that eliminates some of the most cumbersome aspects of Chapter 11.

    Eliminates the absolute priority rule. Allowing individuals to retain non-exempt assets, and business owners to retain equity, even if all creditors are not paid in full.

    Eliminates:

    • Rules requiring the approval of comprehensive disclosure statements prior to solicitation of votes for confirmation
    • Rules allowing creditors to form oversight committees whose administrative expenses must also be paid at confirmation
    • Rules allowing creditors and other parties to propose competing plans of reorganization
    • exception to the rule prohibiting debtors from modifying home mortgages in bankruptcy;
      • a small business debtor now may modify a home mortgage that is not a purchase-money mortgage and that was given in connection with the debtor’s business,
        • e.g., small business loans secured with a second or third mortgage on the residence.
    • real estate investors qualify as a small business debtors
    • small business debtors may pay administrative expense claims over several years