Various provisions of the Bankruptcy Code provide a special designation and treatment for small businesses that fall within a specific criteria. This designation allows for a faster, more efficient and cost effective way to reorganize a Chapter 11 Bankruptcy case.
Who is a Small Business Debtor?
A small business debtor is defined by the Bankruptcy Code as a “person” engaged in commercial or business activities, not including a person that primarily owns or operates real property, that has aggregate non contingent liquidated secured and unsecured debts that do not exceed $2,343,300 for a case in which the United States Trustee has not appointed a creditor’s committee. Since the passage of BAPCPA, it is mandatory that the debtor proceeds as a Small Business Debtor if it qualifies.
Small Business Debtors generally have greater duties as compared to non Small Business Debtors and the United States Trustee has more oversight over these cases. However, these debtor are subject to shorter deadlines allowing faster and more efficient reorganization process. Additionally, this designation allows the hearing on Confirmation of the Chapter 11 Plan to be held at the same time as a hearing on disclosure statement allowing further expedition of the case.