Small Business Reorganization Act
Is your business is struggling? You should know about SBRA.
Yes, I know. It sounds like a brand of hummus. It’s actually a recent addition to the bankruptcy code, designed to keep businesses afloat. And the timing could not be better given the pandemic.
SBRA stands for Small Business Reorganization Act. It’s only been around since February 2020. And the timing is quite fortuitous given the pandemic we are in.
In short, SBRA – commonly known as Subchapter V – is within Chapter 11 of the Bankruptcy Code.
I’ll cut to the chase. A business, or a person, filing SBRA can:
- ask for up to five years to get current on back rent or mortgage payments
- get up to five years to pay back sales taxes, payroll withholding taxes, and recent income tax. It also can get rid of old income taxes (those at least three years old)
- can pay the value of collateral instead of the outstanding debt, at about 5% interest (called a “cram down”)
- eliminate or “cram down” a second mortgage if the loan was taken out to keep the business going
SBRA Has Many Other Benefits as Well
Right now, if your business is struggling – the landlord is at the door, the city wants its sales taxes today or it will lock your doors, the vendors are threatening to cut you off – call Sean or me today. We offer a free consultation.
Let’s figure out a good strategy to keep your business … in business.