Washington, DC - The Department of Justice’s U.S. Trustee Program (USTP) is fully prepared to implement the Small Business Reorganization Act of 2019 (SBRA), which goes into effect today.  The SBRA was passed by Congress and signed into law by President Trump last August.

“The SBRA represents an innovative effort to expedite and reduce the cost of bankruptcy for small business debtors to reorganize their debts and save their businesses,” said USTP Director Cliff White.  “The USTP has spent the past six months preparing for its implementation and is committed to ensuring that the law is carried out as intended.” 

Under the SBRA, small business debtors―defined as entities with less than about $2.7 million in debts that also meet other criteria―may voluntarily elect to proceed under a new subchapter V of chapter 11 of the Bankruptcy Code.  Among other things, subchapter V imposes shorter deadlines for completing the bankruptcy process, allows for greater flexibility in negotiating restructuring plans with creditors, and provides for a private trustee who will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization. 

According to Director White, the USTP’s role in these small business cases is to “appoint private trustees with business experience to serve as subchapter V trustees, minimize the need for costly litigation, and ensure compliance with the Bankruptcy Code and the expeditious resolution of cases.” 

As part of the USTP’s intensive preparation to implement the SBRA, U.S. Trustees conducted a nationwide search for qualified candidates to serve as subchapter V trustees, ultimately selecting about 250 candidates from more than 3,000 applications.  These trustees offer a diverse set of business, accounting, turn-around management, and legal skills.  In addition, the USTP developed a comprehensive manual and handbook to guide staff and subchapter V trustees in carrying out their new SBRA responsibilities; provided extensive training to staff, subchapter V trustees, bankruptcy professionals, and others interested in the new law; and coordinated with the bankruptcy courts on administrative issues to ensure a successful implementation. 

The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The Program has 21 regions and 90 field office locations covering 88 judicial districts. Learn more about the Program at https://www.justice.gov/ust.