About SBRA and sections 1181 through 1195
The Small Business Reorganization Act of 2019 (SBRA) took effect on February 19, 2020. It added a new Subchapter V to Chapter 11, codified at 11 U.S.C. ยงยง 1181 through 1195. Subchapter V is available only to small business debtors meeting the debt-cap and conduct requirements of section 1182, who must elect it on the petition or by amendment within a short statutory window.
The principal benefits relative to a traditional Chapter 11 include no creditors' committee absent court order, no separate disclosure statement, exclusive plan-proposal rights for the debtor throughout the case, a relaxed absolute-priority rule under section 1191(b), a Subchapter V trustee who facilitates rather than displaces the debtor, and a debtor-friendly section 1192 discharge that applies after plan payments are completed under a nonconsensual plan.
SBRA's original $2,725,625 aggregate debt cap was temporarily raised to $7,500,000 by the CARES Act and subsequent reauthorizations. The current cap should be verified against the most recent enabling legislation before relying on eligibility analysis.
Subchapter V deep-dives
- SBRA OverviewStatutory architecture of sections 1181-1195, legislative history, the relationship to traditional Chapter 11, and an orientation for first-time Subchapter V practitioners.
- Eligibility under Section 1182The aggregate-debt cap, the engaged-in-commercial-or-business-activities requirement, the affiliate-aggregation rules, and disqualifying debtor types.
- Plan Confirmation StrategyConsensual confirmation under section 1191(a), nonconsensual cramdown under section 1191(b), the projected-disposable-income standard, and the fair-and-equitable test.
- Trustee Role ExpandedSection 1183 duties, the status-conference and report obligations, the trustee's role facilitating a consensual plan, and the SBRA compensation framework.
- Discharge MechanicsSection 1192 discharge upon completion of plan payments under a nonconsensual plan, the 1141(d) discharge upon confirmation under a consensual plan, and section 523(a) carve-outs.