FOUR NEW BANKRUPTCY ACTS SIGNED INTO LAW ON AUGUST 23, 2019

FOUR NEW BANKRUPTCY ACTS SIGNED INTO LAW ON AUGUST 23, 2019

August 29, 2019

On August 23, 2019 four bankruptcy bills were signed into law, with three of the four being effective immediately.  The Family Farm Relief Act of 2019, Pub. L. 116-51, Honoring American Veterans in Extreme Need Act of 2019, (HAVEN Act), Pub. L. 116-52 and the National Guard and Reservists Debt Relief Extension Act of 2019, Pub. L. 116-53 all are in effect as of the date of signing. The Small Business Reorganization Act of 2019 will become effective 180 days after enactment on February 19, 2020.  Pub. L. 116-54.

 

The Family Farm Relief Act raises the debt limit for seeking agricultural bankruptcy protection from $4,411,400 to $10,000,000. This change in the existing laws will allow more farmers to utilize Chapter 12, and not be forced to file for bankruptcy under Chapter 11, reorganization. The new law can be found at (https://www.congress.gov/116/bills/hr2336/BILLS-116hr2336enr.pdf).

 

The purpose of the HAVEN Act is to prevent the inclusion of certain types of third-party payments into the monthly income calculation. The payments excluded from income include certain amounts attributable to a disability, combat related injuries, or death of a member of the armed forces. This legislation can be located at: (https://www.congress.gov/116/bills/hr2938/BILLS-116hr2938enr.pdf).

 

Members of the National Guard and Reservists, received extended protections from the bankruptcy means tests that were set to expire on December 18, 2019. This legislation was first enacted in 2008 for a period of three years, and then was extended twice to achieve the December expiration date, which has now been extended to December 18, 2023. This new extension is located at: (https://www.congress.gov/116/bills/hr3304/BILLS-116hr3304enr.pdf),

 

The final new bankruptcy laws, titled the Small Business Reorganization Act of 2019, add new section V to Chapter 11 reorganizations. This new legislation will provide new procedures for small business debtors and will streamline the plan of reorganization process. Specifically, a Plan of Reorganization under this new legislation will need to meet the 90 day deadline contained in 11 U.S.C. § 1189(b).

 

The preference sections of the Bankruptcy Code, 11 U.S.C. § 547, were are also revised with the new laws.  These new changes to the preference laws will apply to all bankruptcy proceedings.  The preference law changes appear to be refinements and clarifications of the existing laws as well as specific inclusion of cases filed under the Small Business Reorganization Act of 2019. To view the entire new legislation go to: (https://www.congress.gov/116/bills/hr3311/BILLS-116hr3311enr.pdf).

 

By: Gregg Smith