Changes to Preference Practices Under New Bankruptcy Law
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The recently signed “Small Business Reorganization Act of 2019″ creates a subchapter to Chapter 11 for small business debtors, i.e. those with no more than $2,725,625 in secured and unsecured debts combined, to address the unique issues faced by those companies in the bankruptcy process, explains Timothy J. McKeon in a post on Mintz’ website.
In addition to the creation of “subchapter V” to Chapter 11, the SBRA also makes important amendments to statutory provisions governing preference actions.
The new rule requires a debtor or trustee to consider a party’s statutory defenses “based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or reasonably knowable affirmative defenses” prior to commencing an action under section 547, McKeon writes.
