This past week the President signed a bill into law that made sweeping revisions to the way small businesses are handled inside a Chapter 11 Bankruptcy. The new law makes the process quicker, therefore less expensive, and easier, with few complications and approvals from third parties. It is as momentous a change for small business as Chapter 13 was for Wage earners in 1978.
This new law takes effect in six months. The changes are so sweeping that their significance for businesses experiencing tax problems, cash flow challenges, and secured creditor issues cannot be underestimated.
Proper prior planning and pre-positioning is now more important than ever. But, as always, certain actions can result in criminal liability or non-discharge of debts. So, careful understanding of what can and cannot be done pre-bankruptcy is essential. While a positive vote of creditors under the old Chapter 11 system might have sheltered many pre-petition decisions, the Court, not creditors, must now take the lead role in viewing and judging the conduct of debtors. Transparency and honesty will be essential under this new law.
Seeking the advice of a Bankruptcy Specialist is now more important than ever.
This article is written by an attorney at Attorney Donald Wyatt PC. Always consult an attorney before making any legal decisions. To make an appointment today, please click here to contact us.