Small business bankruptcies increased debt ceiling sunsets on March 27, 2021

The SBRA debt limit was $2.7 million, of which 50% had to be business debt.  The CARES Act, which became effective March 27, 2020, increased the debt ceiling to $7.5 million.   That increase will terminate on March 27, 2021 unless Congress takes further action, which most of us are assuming will happen.  But it may not.  Eligible small business debtors should promptly consider whether to take advantage of Subchapter V before the CARES Act modifications expire and the eligibility debt ceiling returns to $2.7 million. Unless the March 27, 2021 deadline is extended by Congress, we expect a sharp increase of Chapter 11 filings under Subchapter V at the end of 2020 through Q1 2021.

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