Proposed Chapter 11 Reform Would Make Bankruptcy Filing Easier for Small Businesses

twl_2014_dec_blog7The American Bankruptcy Institute released a much-anticipated report this week filled with recommendations for reforming Chapter 11. The lengthy report proposed several changes that would make filing Chapter 11 more affordable and less complicated for small businesses with less than $10 million in assets or debt. According to the report, small companies made up 74 percent of all firms that filed for Chapter 11 protection last year. One way the ABI is recommending making Chapter 11 easier for this group is the elimination of the costly unsecured creditors committee. Currently, the committee hires lawyers and financial advisers at the bankrupt company’s expense, making filing cost prohibitive for a lot of small companies.

Read here to learn about other proposed changes in the report.