Document Type
Article
Abstract
On August 23, 2019, the Small Business Reorganization Act of 2019 (SBRA) was signed into law, adding a new subchapter to Chapter 11 for small business debtors, i.e. “Subchapter V”. The underlying driver for SBRA was a concern that while most Chapters 11 cases are small business debtors, most small business debtors face difficulty successfully reorganizing under Chapter 11. SBRA is intended to streamline Chapter 11 reorganization for small business debtors by making the process quicker and cheaper. However, SBRA arguably curtailed the scope of discharge when a plan is confirmed without the consent of the creditors for corporate small business debtors. This is a dramatic change from the typical corporate Chapter 11 case in which corporate debtors receive a broad discharge. This article analyzes the caselaw interpreting Subchapter V and the application of the discharge to legal entities. The case is made that the limited discharge in Subchapter V potentially infringes on the rescue of small businesses, conflicts with the policy behind SBRA, and may be a “death blow” to rescuing small businesses. A statutory reform enhancing the scope of the discharge that will facilitate the rescue of small businesses in Subchapter V is proposed.
First Page
1
Last Page
36
Recommended Citation
Robert J. Landry III,
Applicability of Discharge Exceptions to Corporate Debtors in Subchapter V: A “Death Blow” to Rescuing Small Businesses,
17 J. Bus. Entrepreneurship & L.
1
(2024)
Available at: https://digitalcommons.pepperdine.edu/jbel/vol17/iss1/1
