The bankruptcy industry is bracing for a spike in small business bankruptcies triggered by the coronavirus pandemic and slow economic growth over the past decade. According to a poll by the U.S. Chamber of Commerce, more than 40 percent of the nation’s 30 million small businesses could close within the upcoming months. This crisis will affect our economy for years to come, as it is possible we might lose much of the small business sector.
The AIS bankruptcy database shows that the first quarter of 2020 yielded a 4 percent increase in commercial bankruptcy filings from the previous year. However, many of those filings were made prior to the pandemic in a healthy economy. Small Business owners are now waiting to find out if they will receive the federal stimulus aid prior to filing for bankruptcy.
Amidst all the chaos, the Small Business Restructuring Act (SBRA) can be a silver lining for small businesses. The new rules, known as Subchapter 5, and its amendments through the CARES Act offer the power of reorganization with simplifications to firms with up to $7.5 million in debt. According to a report from the Bookings Institution, this change alone means that Subchapter 5 could assist up to 70% of businesses that may file for bankruptcy. For more information and insights regarding expectations for small business and consumer bankruptcies, please join us for a webinar with John D. McMickle on Thursday, May 14th.
John D. McMickle, founding principal of North South Government Strategies, discusses where small business and consumer bankruptcy filings could be headed, as a result of the COVID-19 public health emergency.This webinar will focus on several key items for financial institutions including:
Projected bankruptcy filing volumes and trends
Details on the new Small Business Recovery Act (SBRA)
Important aspects of SBRA for lenders
Impact of CARES Act on consumer bankruptcy law
The discussion will end with an open Q&A session with John, who served as Counsel to the Senate Judiciary Committee where he advised Chairman Grassley (R-IA) on an array of policy matters under the committee’s jurisdiction, including the last comprehensive re-write of the nation’s bankruptcy laws.
This event is free for all participants. However, registration is required.