Biden signs Grassley-led bankruptcy bill

WASHINGTON- President Joe Biden today signed into law a bipartisan bill drafted by Sen. Chuck Grassley (R-Iowa) to help small businesses and individuals stay afloat during bankruptcy. The Bankruptcy Threshold Adjustment and Technical Corrections Act (S.3823) becomes law at a time when Americans are grappling with 40-year high inflation, rising interest rates and fears of an impending recession. As a ranking member of the Judiciary Committee, Grassley joined forces with the Sens. Sheldon Whitehouse (DR.I.), Dick Durbin (D-Ill.) and John Cornyn (R-Texas) to advance the bill, which was unanimously approved by the Senate and passed the House of Representatives with a majority bipartisan vote of 392-21.

“As American families and small businesses face mounting economic uncertainty amid historic inflation and rising interest rates, it is more important than ever that we remove barriers to reorganization when people are going through difficult times. Our bipartisan bill – now law – builds on my Small Business Reorganization Act 2019with Senator Whitehouse to streamline the small business bankruptcy process by eliminating cumbersome paperwork designed for large corporations,”
Grassley said.

“The bankruptcy process should help small businesses and working families overcome financial challenges and emerge stronger. This new law will help them do that. I’m glad to see President Biden sign off on this bipartisan effort. I was delighted to work with Senators Grassley, Durbin and Cornyn to improve our bankruptcy process,” whitehouse said.

“Too many family businesses are caught in a complicated system of bankruptcy while trying to get back on their feet. At the same time, many families are struggling with crushing levels of debt. This bipartisan bill brings relief to both. I am grateful to my colleagues in the Senate for their partnership on this essential legislation, and I commend President Biden for moving quickly to enact it – a testament to the commitment of this Congress and this administration to supporting businesses and American families, durbin said.

“For small businesses and families who have battled through the pandemic and are now facing economic hardship, our complicated bankruptcy process can be another obstacle to survival. I am pleased that we were able to come together on this respite in the face of heavy demands, especially given record inflation and rising interest rates,” Cornin said.

Whitehouse and Grassley spent the Small Business Reorganization Act in 2019 to establish simplified bankruptcy procedures that help small business owners keep their businesses afloat and preserve jobs. The 2020 CARES Act temporarily allowed more small businesses to qualify for these streamlined procedures by increasing the small business debt limit from $2.7 million to $7.5 million. This increase expired on March 27, 2022.

The Bankruptcy Threshold Adjustment and Technical Corrections Act, which now has the force of law, provides a two-year extension of the CARES Act increase to $7.5 million and makes minor technical fixes to the Small Business Reorganization Act. It also increases the debt limit for individuals to qualify for Chapter 13 bankruptcy for two years, allowing more people to try to save their homes from foreclosure.

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Anne G. Cash