Small business is a significant engine that drive the economy in Maryland and around the country. The people who establish and run small businesses employ a large percentage of the American workforce. In good economic times, these companies typically remain strong. During an economic downturn, concerns of possible bankruptcy may evolve. A new law goes into effect in 2020 that may help alleviate that concern.
The Small Business Reorganization Act of 2019 includes many provisions that should make life somewhat easier for small business owners during down economic times. Under the new law, a business carrying less than $2,725,625 in debt will have 90 days to come up with a reorganization plan. The plan does not have to eliminate the debt in order for the business to continue operating. There is also an increase in the time allowed for paying administrative expenses associated with the bankruptcy filing.
In addition, equity interests for owners and creditors will be determined by what is considered to be fair and equitable. The new law also makes it more difficult for creditors to go after some personal assets. This would include an owner’s residence. All of this is expected to reduce the time a bankruptcy procedure will require.
Bankruptcy should never be taken lightly but as a way to preserve a business that a person has spent years building. A person in Maryland who is concerned about the possibility of a bankruptcy may wish to speak with a legal professional. An attorney can review the state of the business and advise the client as to what steps may need to be taken.