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Client Alert: Increased Debt Limit for Small Business Reorganizations Approved – June 27, 2022


President Biden recently signed the Bankruptcy Threshold Adjustment and Technical Corrections Act (the “Adjustment Act”), which restores the $7,500,000 debt limit for Small Business Reorganizations under Subchapter 5 of Chapter 11. It also amends sections 104(a) and (b) of the Bankruptcy Code so that the debt limit will periodically be adjusted for inflation as provided in those sections.  Under the Adjustment Act, the raised debt limit (as well as certain other provisions) are made retroactive to any case that was commenced on or after March 27, 2020 and is pending on June 21, 2022, the date of enactment of the Adjustment Act. A summary of the provisions can be found here.