Washington, D.C. – Senator Sheldon Whitehouse (D-RI) and Congressman David N. Cicilline (RI-01) today announced that both houses of Congress have passed the Small Business Reorganization Act, legislation they sponsored along with Senator Chuck Grassley (R-IA) and Congressman Ben Cline (VA-06) to streamline bankruptcy procedures and provide new tools to improve a small business owners’ ability to keep their companies afloat and preserve jobs. The legislation awaits the President’s signature.
“The path to success is not a straight line for many small businesses. Our bill will improve the bankruptcy process to give struggling small businesses better tools to get back on solid footing and preserve jobs,” Whitehouse said. “I’m grateful to Senator Grassley for his longtime partnership on this issue, and to Congressman Cicilline for his support.”
“Small businesses are the backbone of our nation’s economy, and we need to make sure they have every opportunity to succeed,” Cicilline said. “This important legislation gives small businesses who have been pushed to the brink of failure the tools they need to reorganize. I’m thankful for Senator Grassley’s and Senator Whitehouse’s support, and I look forward to seeing the bill signed into law.”
“The Small Business Reorganization Act takes into account the unique needs of small businesses and streamlines existing reorganization processes. A well-functioning bankruptcy system, specifically for small businesses, allows businesses to reorganize, preserve jobs, maximize the value of assets and ensure the proper allocation of resources,” Grassley said.
Chapter 11 in the bankruptcy code was designed for administering complex business reorganizations involving multi-million dollar companies. While several provisions specifically focus on small business debtors, a significant amount of research shows that Chapter 11 may still create difficulties for small businesses, including high costs, procedural roadblocks, and the inability of business owners to maintain equity in their companies. The legislation addresses these issues by adding a new subchapter V to Chapter 11 to streamline the bankruptcy process for small business. The new process will increase the chances that small business can use the bankruptcy process to get a fresh start.
Key provisions of the Small Business Reorganization Act will increase debtors’ ability to negotiate a successful reorganization and retain control of the business while reducing unnecessary procedural burdens and costs.
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