On August 23, four new bankruptcy bills were signed into law by President Trump. First, the Small Business Reorganization Act of 2019, which adds a new subsection to Chapter 11 of the Bankruptcy Code to address problems faced small business debtors in reorganization. The additions were made in order to streamline the Chapter 11 processes and expedite reorganization for small business debtors. Under the new subsection V, a “small business debtor” is a person in a business or commercial activity with an aggregate or noncontingent liquidated secured and unsecured debts as of its bankruptcy filing date of not more than $2,725,625. This new law is largely inspired by the work of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11.
Second, the Honoring American Veterans in Extreme Need Act of 2019 or the HAVEN Act excludes VA and Department of Defense disability payments from the means calculation of monthly income in bankruptcy. This bill was included in the National Defense Authorization Act, passed back in June, and comes in response to the inequitable treatment of disabled veterans in consumer bankruptcy cases. Before the HAVEN Act, the Bankruptcy Code only excluded benefits received by individuals under the Social Security Act from the calculation of monthly income and had no provision for veterans’ benefits.
Third, the National Guard and Reservists Debt Relief Extension Act of 2019 authorizes a four-year extension on an existing exemption from the Chapter 7 “presumption of abuse” test for qualifying members of the Armed Forces reserves and the National Guard. Without the legislation, previous active duty pay may be included in an evaluation of current income, placing individuals who file for bankruptcy in a higher income bracket than they are able to afford with post-active duty income.
Fourth, the Family Farmer Relief Act of 2019 updates Chapter 12 of the Bankruptcy Code to reflect economic challenges faced by distressed family farms. While farm sizes have increased since Chapter 12’s adoption in 1986, net farm income has decreased since the early 2000s. This new law increases the debt threshold for a family farmer from $4,411,400 to $10,000,000.
Curran Antonelli represents a broad range of businesses and corporate entities, private equity funds, as well as governmental agencies and other interested parties in all phases of the bankruptcy process and in bankruptcy related transactions and litigation. As advocates and trusted business advisors, our well-established foundation of knowledge and understanding of our clients’ business interests, enables our attorneys to deliver unparalleled individualized attention to our clients of all sizes with their litigation and corporate transactional needs.