US Congress moves to restore small business bankruptcy program

Source published 1h 29m agoTerminal published 1h 27m ago

Summary

On September 17, 2026, the US Congress took significant steps toward restoring access to a vital bankruptcy option for small businesses, as both the House of Representatives and the Senate passed bills to raise the debt-eligibility limit for Subchapter V bankruptcies to $7.5 million after a previous increase had expired in 2024. This legislative action, which has garnered broad bipartisan support, aims to facilitate more efficient and cost-effective debt reorganizations, allowing small businesses to shed debts while maintaining ownership without the burdens of typical Chapter 11 procedures. Subchapter V has become particularly popular, accounting for 44% of all Chapter 11 filings in 2023, especially since the higher eligibility limit was initially raised by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020.

Analysis

US Congress: The US Congress is the bicameral legislative branch of the federal government, comprising the House of Representatives and the Senate, with authority to enact laws and set policy. It is advancing legislation to restore expanded access to the Subchapter V bankruptcy program for small businesses by raising the applicable debt limit. The effort involves aligning bills passed in both chambers for final approval and presidential signature. Amy Quackenboss: Amy Quackenboss is the Executive Director of the American Bankruptcy Institute, a nonprofit organization dedicated to education and research in bankruptcy law. She issued a statement supporting the congressional action, emphasizing how it enables more efficient reorganizations that preserve value for stakeholders. Her comments highlight professional endorsement of streamlined processes for small business debtors. Program Benefits: The Subchapter V option allows eligible businesses to reorganize debts while retaining company ownership and reducing costs and delays compared to traditional bankruptcy proceedings. Bankruptcy Reform: Subchapter V provides small businesses with a streamlined reorganization process that avoids certain procedural requirements of standard Chapter 11 cases, such as court-appointed creditors' committees and quarterly fees to the Department of Justice. Legislative Bipartisanship: Bills to restore higher debt eligibility limits for Subchapter V have advanced with broad support across both major political parties in the House and Senate.

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