No other state has used subchapter V of Chapter 11 bankruptcy code more extensively than Florida. Since the 2019 Small Business Reorganization Act (SBRA) went into effect in February 2020, 463 small businesses in Florida have restructured under the cheaper, faster form of Chapter 11, about one-seventh of national filings. Many businesses were enabled by a CARES Act provision that raised the debt limit for eligible small businesses from $2.7 million to $7.5 million.

Earlier this week, Congress allowed the elevated debt limit to expire, once again putting Chapter 11 out of reach for a majority of small businesses with liabilities in excess of $2.7 million. It’s the latest blow to the Florida bankruptcy bar after two years of depressed filing rates due to government stimulus, low interest rates and lenient lenders.

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