President Joe Biden today signed into law a bipartisan bill authored 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 battling 40-year high inflation, rising interest rates and fears of a looming recession. As Judiciary Committee's ranking member, Grassley partnered with Sens. Sheldon Whitehouse (D-R.I.), Dick Durbin (D-Ill.) and John Cornyn (R-Texas) to advance the bill, which unanimously cleared the Senate and passed in the House of Representatives with an overwhelmingly bipartisan vote of 392-21.
"As American families and small businesses face mounting economic uncertainty amid historic inflation and spiking interest rates, it's more important than ever that we remove hurdles to reorganizing when folks fall on hard times. Our bipartisan bill - now law - builds on my Small Business Reorganization Act in 2019 with Sen. Whitehouse to streamline the bankruptcy process for small businesses by eliminating onerous paperwork requirements designed for major corporations," Grassley said.
"The bankruptcy process should assist small businesses and working families to weather financial hardship and emerge stronger. This new law will help them do that. I'm gratified to see President Biden sign this bipartisan effort. I was pleased to work with Senators Grassley, Durbin, and Cornyn to improve our bankruptcy process," Whitehouse said.
"Too many mom-and-pop shops are getting caught up in a complicated bankruptcy system while working to get back on their feet. At the same time, many families are struggling with overwhelming levels of debt. This bipartisan bill brings relief to both. I'm grateful to my Senate colleagues for their partnership on this critical legislation, and applaud President Biden for acting swiftly to sign this into law-a testament to this Congress's, and this Administration's, commitment to supporting American businesses and families," Durbin said.
"For small businesses and families who fought their way through the pandemic and are now facing economic hardship, our complicated bankruptcy process can be another barrier to survival. I'm glad we could come together on this reprieve from burdensome requirements, especially given record-high inflation and rising interest rates," Cornyn said.
Whitehouse and Grassley passed the Small Business Reorganization Act in 2019 to establish streamlined bankruptcy procedures that help small business owners keep their companies afloat and preserve jobs. The CARES Act of 2020 temporarily allowed more small businesses to qualify for those streamlined procedures by increasing the upper debt limit for small businesses from $2.7 million to $7.5 million. That increase expired on March 27, 2022.
The Bankruptcy Threshold Adjustment and Technical Corrections Act, which is now law, provides a two-year extension to 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 individuals the opportunity to try to save their homes from foreclosure.