Banking Focus Newsletter
Chuhak & Tecson Banking Focus

Small Business Reorganization Act of 2019 helps small businesses reorganize

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (2005 Act) in an effort to make bankruptcy reorganization of small businesses more effective. Recently, Congress recognized that the 2005 Act did not do enough and “…while most Chapter 11 cases are filed by small business debtors, they are often the least likely to reorganize successfully.”1  

Similarly, Congress found that the Bankruptcy Code has Congress recognizing that while the Bankruptcy Code envisioned creditors actively monitoring Chapter 11 cases, the practical result showed claims involved were too small for creditors to devote the time and money necessary to actively be involved.2 

To read more, click here.

Do you have a right of setoff clause?

A setoff acts as a self-help remedy for creditors, which can be accomplished outside of court and often allows creditors to collect a greater amount than obtained under bankruptcy proceedings. A setoff clause in a lender’s agreement is a powerful, yet often an underutilized collection tool of defense available to creditors, ensuring that a greater percentage of what is owed is collected. Click here for an in-depth historical and legal analysis of setoff. 

A setoff cancels mutual obligations involving unrelated transactions and often occurs when a bank seizes the funds of one of its depositors in order to satisfy the debt owed by the depositor to the bank. In other words, entities apply their mutual debts against each other.

To continue reading about the advantages of a setoff clause, click here.
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Francisco E. Connell
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Ronald N. Primack
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Article of Interest:
The SECURE Act – a Congressional holiday gift?

Presented by our Employment Law group

In the midst of holiday gift-giving Congress passed and the President signed an Act considered by many to be the most significant piece of retirement plan legislation since the Pension Protection Act of 2006. Whether the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) will ultimately be considered a gift to employers, only time will tell. In the meantime, this article will summarize the provisions expected to be most impactful on employers. 

To continue reading, click here.


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