Since the inception of the new Subchapter V program, only a small number of commercial filers have used the statute
NEW YORK – OCT 7, 2020 – Epiq, a global leader in legal services, released the first look at the results of the new Chapter 11, Subchapter V, U.S. Bankruptcy Court filings from its AACER business, with a total of 923 new petitions year to date since the program commenced on February 19, 2020. Since then, while the market has been slow to embrace this new filing option, there has been a small but steady increase in month over month filings May to September.
The new statute was made possible by the bipartisan legislation known as the Small Business Reorganization Act of 2019 (SBRA) and was designed to make it easier, faster and less expensive for a small business debtor to file for bankruptcy in the U.S. However, the number of cases filed under Subchapter V represents only 20% of the 4,546 total new commercial Chapter 11 filings since the program commenced.
The top five industry sectors taking advantage of the benefits of Subchapter V represent approximately 40% of the total and include Professional & Technical Services, Health Care, Hospitality & Food Service, Construction and Retail.
“These are not the only small business sectors hit hard by the COVID-19 pandemic,” said Chris Kruse, senior vice president of Epiq AACER. “Even with aggressive support from the U.S. government in the form of the Coronavirus Aid, Relief and Economic Security (CARES) Act, it is still very tough out there for many in the small business community.”
“The new Subchapter V, U.S. Bankruptcy Court filing option hasn’t reached its full potential, as many small businesses have benefited from the PPP funding to provide supplemental liquidity,” said Deirdre O’Connor, managing director of corporate restructuring at Epiq. “If the financial effects of COVID outpace a company’s liquidity runway, Subchapter V may serve as an efficient viable alternative to keep employees, repay debt and most importantly retain ownership.”
About Epiq AACER
Epiq AACER provides a bankruptcy information services platform built with superior data, technology and expertise to create insights and mitigate risks for businesses impacted by bankruptcies. Learn more at http://www.aacer.com.
Epiq, a global leader in the legal services industry, takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters. Epiq subject-matter experts and technologies create efficiency through expertise and deliver confidence to high-performing clients around the world. Learn more at https://www.epiqglobal.com.
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