CONGRESSMAN
Aila Boyd
aboyd@mainstreetnewspapers.com
WASHINGTON — Ben Cline, R-Va., has joined a bipartisan group of lawmakers to introduce legislation aimed at expanding access to a streamlined bankruptcy process for small businesses.
Cline, who represents Virginia’s 6th congressional district, introduced the Bankruptcy Threshold Adjustment Act of 2026 alongside Lou Correa, D-Calif.; Laurel Lee, R-Fla.; and Joe Neguse, D-Colo.
The bipartisan legislation would permanently raise the small business reorganization eligibility threshold for Chapter 11 bankruptcy to $7.5 million. Supporters say the change would allow more small businesses to use a faster and less expensive bankruptcy process while negotiating with creditors.
“The Bankruptcy Threshold Adjustment Act will give small businesses the certainty they need to reorganize, restructure, and keep operating when challenges arise,” Cline said in a statement. “By permanently raising the eligibility threshold, we’re ensuring more job creators can access a streamlined and affordable bankruptcy process that helps them stay open, protect paychecks and meet their obligations.”
The bill would also maintain the requirement that the federal bankruptcy system remain self-supporting, meaning its operational costs are covered by fees paid by those who use it.
Correa said bankruptcy can have significant ripple effects on communities that depend on local businesses.
“Bankruptcy is a painful last resort for struggling businesses, impacting the people and communities that rely on their services,” Correa said. “This legislation would make a streamlined and more cost-effective process accessible to more businesses, enabling them to settle their debts and continue serving their customers.”
Lee said the proposal would provide struggling small and family-owned businesses with a clearer path to reorganize and stay open.
“When small businesses face financial distress, they should have a practical path to reorganize and continue operating,” Lee said. “This legislation permanently restores the $7.5 million debt threshold so more small and family-owned businesses can access a streamlined restructuring process, preserve jobs and continue serving their communities.”
Neguse said the legislation builds on previous efforts to assist small businesses facing economic challenges following the COVID-19 pandemic.
“By making this change permanent, we can protect those in our communities confronting the ongoing cost-of-living crisis and continue to ensure sufficient support for our main street economies,” Neguse said.
The proposal builds on earlier work by Cline, who helped pass the Small Business Reorganization Act in 2019. The law created the Subchapter V reorganization process within Chapter 11 bankruptcy, designed to simplify restructuring for small businesses.
