Neguse, Cline Introduce Bipartisan Bicameral Legislation to Protect Small Business Owners from Bankruptcy

Statement

Today, Congressman Joe Neguse and Congressman Ben Cline (R-VA) introduced the Bankruptcy Threshold Adjustment and Technical Corrections Act, to allow small businesses to restructure debts in light of economic hardships associated with the Coronavirus pandemic and for other purposes. The bill is led in the Senate by the U.S. Senators Grassley and Durbin.

"After two years of economic and financial strain, I believe it is more important than ever that we protect our local entrepreneurs, small businesses owners, and family owned shops," said Congressman Joe Neguse. "Fear of losing your home or car, or falling back on critical payments for childcare and education are realities for many, and we must do all we can to support main street economies as we build back our country."

"The Small Business Reorganization Act has served as a lifeline for struggling businesses over the past two years," Cline said. "Since its inception, the majority of small business debtors have chosen to proceed under the provisions of this bill meaning more entrepreneurs have been able to keep their doors open and employees on payroll during these uncertain times. I'm pleased to join Congressman Neguse in introducing this legislation to ensure even more businesses can take advantage of the initial bill as Americans face economic hardship."

The bill extends the debt limit for two years for small businesses electing to file for bankruptcy under subchapter V of Chapter 11 at $7.5 million, and increases the debt limit for individual Chapter 13 filings to $2.75 million. It is presumed that the debtor will make all payments under a plan and if payments fall back the individual can remedy this by liquidating nonexempt assets, which exclude primary residences and other items essential to a family's livelihood.

Read bill text HERE.

Background:

As Co-Chair of the Congressional Caucus on Innovation and Entrepreneurship, Congressman Neguse has championed multiple bills to expand opportunities for small businesses and to help them weather the economic impacts of the COVID-19 pandemic. Most recently his bill, the PRICE Act, to spur local economic growth and expand partnership opportunities between small businesses and the federal government was signed into law by President Biden. Neguse also introduced legislation to expand the research and development tax credit. Additionally, following the Cameron Peak, East Troublesome Fires, and after the Marshall Fire, Congressman Neguse helped secure a disaster declaration to bring in Small Business Administration relief to support businesses impacted by the fires.

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