The new federal bankruptcy law not only makes it harder for individuals to avoid repaying their debts, it also imposes tougher rules on small businesses that want to keep creditors at bay.
The law, eight years in the making, establishes a streamlined process for small businesses that file for Chapter 11 bankruptcy reorganisation.
Businesses with less than US$2m in debt will have six months to file a reorganisation plan. After that period, the company's creditors can submit reorganisation plans for the business. If no plan is filed within 300 days, the bankruptcy case can be dismissed or converted into Chapter 7 liquidation.
Larger businesses, by contrast, will have 18 months to file reorganisation plans.
