HARRISONBURG — U.S. Rep. Ben Cline, R-Lexington, along with a group of bipartisan legislators, introduced the Small Business Reorganization Act to simplify the bankruptcy process for small businesses on Tuesday.
“The goal of bankruptcy is not to close small businesses,” Cline said. “It is to help keep them open.”
The changes presented in the bill will make the bankruptcy filing process easier for businesses with less than $2.5 million in debt, Cline said.
Bankruptcy proceedings are to sort out the repayment or discarding of debt and are handled by federal courts, according to the United States Court System online portal.
There are multiple types of bankruptcies, commonly referred to as chapters, each with different purposes for individuals, municipalities, businesses and family farmers and fishermen.
Businesses can file for Chapter 7 bankruptcy, for liquidation purposes, or for Chapter 11 bankruptcy, for reorganization purposes.
The bill has support from Democrats and Republicans.
“It’s refreshing to be able to work with colleagues on the other side,” Cline said.
Specifically, Rep. Steve Cohen, D-Tenn., House Judiciary Ranking Member Doug Collins, R-Ga., and chairman of the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law Rep. David Cicilline, D-R.I., all introduced the bill along with Cline.
“I would say that one of the great challenges in this institution is building relationships across the party divide, and I’ve worked really hard in the first six months to try and build those relationships,” Cline said.
Bankruptcy reorganization is a fairly frequent occurrence, Cline said, with recent changes in policy during the mid-1990s and early 2000s.
Cline said he was involved with bankruptcy reforms during his time as staffer for GOP Rep. Bob Goodlatte in the early 2000s.
Goodlatte was the representative for Virginia’s 6th District from 1993-2018.
Also this year, Sen. Chuck Grassley, R-Iowa, and another group of bipartisan legislators put forward changes to bankruptcy filing for family farms, with the same goal as Cline’s Small Business Reorganization Act, but with different details.