Small businesses facing financial hardship often can’t afford the cost of filing for bankruptcy, eroding the power of one of the country’s economic safety nets, The Wall Street Journal reports.
A panel of bankruptcy experts urged members of a Senate Judiciary subcommittee to change the rules so that small businesses get a better shot at survival by filing for chapter 11 protection.
A small business filing for bankruptcy protection often costs between $100,000 to $300,000—figures that can as much as double, say lawyers, in cases where there are creditor disputes.
Today’s hearing put a spotlight on the challenges faced by smaller companies. Roughly 90% of companies in chapter 11 protection have less than $10 million worth of property or debt, said Maine bankruptcy lawyer Robert Keach.
