Bankruptcy Court Concludes SBRA Applies to Pending Cases

In what appears to be the first case applying the Small Business Reorganization Act (SBRA), on February 21, 2020, a Central District of California bankruptcy court (In re Progressive Solutions, Inc., Case No. 8:18-bk-14277-SC) held that an existing chapter 11 debtor could amend its bankruptcy petition to make the Section 5 election and thus take advantage of the applicable SBRA provisions in its pending case. According to the bankruptcy court:

"To recap, this Court has found no legal reason to restrict a pending Chapter 11 case to re-designate to a Subchapter V case, on the facts underlying the Motion. No party has provided any legal reasoning to support a blanket prohibition of such redesignation by the Debtor. The arguments against pending case being designated by the Debtor as a Subchapter V case all have to do with practicality and not legality. However, there remains one final, procedural problem requiring denial of the Motion. "