The Small Business Reorganization Act of 2019 became effective Feb. 19. The law is designed to make Chapter 11 less expensive and more practical for small businesses and certain individuals whose secured and unsecured debts are no more than $2,725,625. Without this relief, many small businesses would find themselves unable to navigate through Chapter 11 due to the costs and complexity of confirming a plan.

The timing of the passage of this law is of great consequence considering the economic havoc the Covid-19 will reap on small businesses especially those in the travel, hospitality, retail, trade and services sectors upon which Florida relies so heavily. For example, whereas, a restaurant that was forced to shut its doors for one month or a retail store with either no sales or a precipitous drop would typically face an insurmountable hurdle to return to or remain in business, the new law will enable that same restaurant to resume operations or retail location to remain in business and develop a plan to repay either delinquent mortgage payments or rent, wages, salaries, taxes,  and vendor debt without requiring the consent of their respective creditors. This crisis will likely motivate creditors to be flexible with their obligors to avoid catastrophic losses.