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July 7, 2024
July 2, 2024, 8:03 PM
NEW YORK (AP) — A type of bankruptcy protection filing that made it easier for small businesses to seek relief has expired, which will complicate filing for small businesses with more than $3 million in debt.
The filing type, known as Subchapter V, is cheaper and less time-consuming than the traditional Chapter 11 bankruptcy filing.
The rule went into effect in 2020 as part of the Small Business Reorganization Act. It let small businesses with less than $2.75 million in debt file under the subchapter. That debt limit was extended to $7.5 million in March 2020 amid the pandemic for one year — and that was extended two more times.
A bill to make the debt limit permanent failed, so the debt threshold reverted to $3 million (the original debt limit adjusted for inflation), on June 21.
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