Friday, President Trump signed four bills into law that amend current consumer and commercial bankruptcy laws. Because these four bills may have an effect on your business, we wanted to provide you with a brief synopsis of the changes most pertinent to your business.
- H.R. 2336— “The Family Farmer Relief Act of 2019”: this law increases the debt limit of eligibility for family farmers to file for chapter 12 bankruptcy. Previously, chapter 12 bankruptcy was only available to family farmers whose debt did not exceed $3,237,000. Under the FFRA, family farmers will be eligible to file for chapter 12 bankruptcy so long as their debt does not exceed $10,000,000. This change is expected to significantly increase the number of chapter 12 bankruptcy filings.
- H.R. 2938 and H.R. 3304—“The Honoring American Veterans in Extreme Need Act of 2019” and “The National Guard and Reservist Debt Relief Extension Act of 2019”: these two laws exempt certain military and veterans benefits from the means test in consumer bankruptcies. This change is expected to lead to increased bankruptcy filings for active and veteran members of the military.
- H.R. 3311—“The Small Business Reorganization Act of 2019”: This law establishes a subchapter of chapter 11 (generally used for larger business reorganizations) under which small business debtors can reorganize using more simplified and expedited procedures. To be eligible under the SMRA, a small business debtor (as defined by the act) must have less than $2,725,625 in debt at the time of the bankruptcy filing. This change is slated to go into effect on February 19, 2019.
If you have questions about the details of these laws or how they might specifically affect you or your customers, please do not hesitate to reach out to Martin Pringle Bankruptcy Attorneys; Rick Griffin or Samantha Woods in our Wichita Office and Scott Haines in our Overland Park Office.