The U.S. small business bankruptcy amendments: A global model for reform?

• DOI: http://doi.org/10.1002/iir.1386
• Author: Edward J. Janger
• Date: 01 June 2020
• Published date: 01 June 2020

RESEARCH ARTICLE

The U.S. small business bankruptcy

amendments: A global model for reform?

Prof. Edward J. Janger

Brooklyn Law School, New York, New

York, USA

Correspondence

Edward J. Janger, Brooklyn Law School,

New York, NY.

Email: edward.janger@brooklaw.edu

Abstract

On February 19, 2020, the Small Business Reorganiza-

tion Act of 2019 went into effect in the United States.

This statute was intended to make the rescue regime of

Chapter 11 of the United States Bankruptcy Code more

effective for smaller businesses that would not other-

wise have the financial wherewithal to complete a tra-

ditional Chapter 11 reorganization. This article

describes the central innovations of the new statute,

and considers whether they might be adaptable by

other countries.

1|INTRODUCTION

International organizations such as the World Bank and UNCITRAL are currently hard at work

crafting legislative templates to address the insolvency of “Micro, Small and Medium Sized

Enterprises”(MSMEs). Such instruments, it is believed, have the potential to benefit national

economies in three ways:

1 rehabilitating failed entrepreneurs;

2 rescuing viable businesses; and

3 improving financial recoveries to creditors.

1

Corporate restructuring, as practiced in the United States, UK, and elsewhere, is tailored to

the insolvency of firms worth hundreds of millions or even billions of U.S. Dollars. Corporate

rescue regimes, such as U.S. Chapter 11 or the UK scheme of arrangement are simply too cum-

bersome and expensive to work for small to mid-size businesses. This is equally true in devel-

oped and developing economies. Small to mid-sized businesses make up the largest part of the

Received: 11 May 2020 Revised: 2 June 2020 Accepted: 3 June 2020

DOI: 10.1002/iir.1386

© 2020 INSOL International and John Wiley & Sons Ltd

254 Int Insolv Rev. 2020;29:254–266.wileyonlinelibrary.com/journal/iir