July 2, 2022

Volume XII, Number 183

Advertisement
Advertisement

July 01, 2022

Subscribe to Latest Legal News and Analysis

June 30, 2022

Subscribe to Latest Legal News and Analysis

June 29, 2022

Subscribe to Latest Legal News and Analysis

Sun Sets on Increased Subchapter V Debt Limit for Now

A key bankruptcy-related response to the pandemic has ended as the increased debt limits under subchapter V of chapter 11, passed by Congress in the CARES Act, have expired. In an effort to provide bankruptcy relief and access to subchapter V of chapter 11 of the Bankruptcy Code to a greater number of small businesses, Congress raised the debt limit for subchapter V eligibility from the original $2,725,625 to $7.5 million via the CARES Act, passed in March of 2020.  Extended once before, the increased debt limit provision had been due to sunset on March 27, 2022, absent action to extend the increase by Congress. On March 14, Sen. Chuck Grassley (R-Iowa) introduced the Bankruptcy Threshold Adjustment and Technical Corrections Act, aiming to make the increase in the subchapter V debt limit permanent with wide bipartisan support. 

However, operating on a tight timeline and with other issues to handle in the Congress, the increase was not made permanent prior to the deadline. The debt limit under subchapter V reverted to the original $2,725,625 limit imposed by the Small Business Reorganization Act of 2019, effective March 27. 

While the debt limit has reverted to its original, lower threshold, it is likely that the effort to permanently raise the debt limit will continue given bipartisan support for the increase. Creditors should expect to see the increase made permanent and the subchapter V debt threshold rise to $7.5 million for good in the near future. 

Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume XII, Number 88
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Associate

Will is an associate in the Capital Markets practice group and focuses his practice on bankruptcy and restructuring matters. Prior to joining Womble Bond Dickinson, Will served as a law clerk to the Honorable Joseph N. Callaway in the United States Bankruptcy Court for the Eastern District of North Carolina where he gained valuable experience and insight into bankruptcy litigation and general restructuring issues. 

Will graduated from the University of North Carolina School of Law, where he completed internships with federal courts including the...

919-755-8180
James S. Livermon III Creditor Rights and Bankruptcy Attorney Womble Bond Dickinson Raleigh, NC
Partner

James "Charlie" Livermon is a Chambers-ranked attorney with a robust practice focused on creditors' rights and bankruptcy. A board-certified specialist in business and consumer bankruptcy, he has represented secured and unsecured creditors in Chapter 7, 11, 12 and 13 bankruptcy cases in all bankruptcy districts in North Carolina. He has significant experience in commercial loan workouts, restructurings, receiverships, foreclosures and other pre- and post-judgment remedies, and has defended lenders and creditors in lender liability actions, contract disputes, fraud, misrepresentation and...

919.755.2148
Jill Walters Bankruptcy Lawyer Womble Bond Dickinson
Partner

Jill Walters has more than a decade of experience protecting the financial interests of financial institutions, corporate clients of all sizes, and individuals, and guiding these creditor-clients through the bankruptcy and restructuring process. She regularly represents secured and unsecured creditors in bankruptcy cases filed under all chapters of the United States Bankruptcy Code and has experience representing clients of all sizes in adversary proceedings across the country.

Her practice includes lender representation in collection, foreclosure, and claim and delivery actions....

919.755.2185
Richard A. Prosser Partner Womble Bond Dickinson (US) LLP
Partner

A litigator focused on commercial litigation and creditors' rights, Richard is known for his versatility and ability to handle all aspects of problem loan representation, ranging from complex workouts and restructures to contested litigation and lender liability defense. He regularly represents clients in commercial collections actions, workouts, restructurings, receiverships, bankruptcies, foreclosures and other collateral recovery, and has litigated a variety of business disputes in state and federal court, including matters involving fraud, misrepresentation and...

919-755-2189
Advertisement
Advertisement
Advertisement