Rudolph J. DiMassa Jr., left, and Drew McGherin, right, of Duane Morris. Introduction
In In re Ellingsworth Residential Community Association, the U.S. Bankruptcy Court for the Middle District of Florida determined that a nonprofit community association engaged in the requisite "commercial or business activities" sufficient to qualify it as a "small business debtor" for purposes of filing a Chapter 11 petition under Subchapter V of the Bankruptcy Code. In so holding, the court determined that "any person who conducts a business or commercial enterprise is a small business debtor," interpreting the eligibility for relief under this provision broadly. If other courts follow the rationale of the Ellingsworth court, we could soon be witness to a widespread application of Subchapter V of the Bankruptcy Code as the effects of the global COVID-19 pandemic ripple into the future.Court Opens Door for Widespread Eligibility Under Subchapter V of Bankruptcy Code
In In re Ellingsworth Residential Community Association, the U.S. Bankruptcy Court for the Middle District of Florida determined that a nonprofit community association engaged in the requisite "commercial or business activities" sufficient to qualify it as a "small business debtor" for purposes of filing a Chapter 11 petition under Subchapter V of the Bankruptcy Code.
November 12, 2020 at 01:03 PM
7 minute read
Rudolph J. DiMassa Jr., left, and Drew McGherin, right, of Duane Morris.
Introduction
In In re Ellingsworth Residential Community Association, the U.S. Bankruptcy Court for the Middle District of Florida determined that a nonprofit community association engaged in the requisite "commercial or business activities" sufficient to qualify it as a "small business debtor" for purposes of filing a Chapter 11 petition under Subchapter V of the Bankruptcy Code. In so holding, the court determined that "any person who conducts a business or commercial enterprise is a small business debtor," interpreting the eligibility for relief under this provision broadly. If other courts follow the rationale of the Ellingsworth court, we could soon be witness to a widespread application of Subchapter V of the Bankruptcy Code as the effects of the global COVID-19 pandemic ripple into the future.
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