WASHINGTON — Today, Representative Lou Correa (CA-46) — alongside Representatives Ben Cline (VA-06), Joe Neguse (CO-02) and Laurel Lee (FL-15) — introduced the bipartisan Bankruptcy Threshold Adjustment Act of 2026. The legislation would permanently raise the small business reorganization threshold for Chapter 11 bankruptcy to $7.5 million, allowing more small businesses to access a faster, more cost-effective bankruptcy process while negotiating with creditors, keeping their doors open, employees on payroll, and suppliers paid.
“Bankruptcy is a painful last result for struggling businesses, impacting the people and communities that rely on their services. 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,” said Rep. Correa. “With the heavy burdens that Main Street already faces in this economy, we need to give them opportunities to not only survive but thrive.”
“The Bankruptcy Threshold Adjustment Act will give small businesses the certainty they need to reorganize, restructure, and keep operating when challenges arise,” said Rep. Cline. “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. Just as importantly, this bipartisan bill maintains the integrity of our bankruptcy system by keeping it self-supporting and fair for all who rely on it.”
“When we enacted the Bankruptcy Threshold Adjustment Act in 2022, we responded to the economic and financial strain Americans faced in the wake of the Coronavirus pandemic. Since then, this legislation has protected our local entrepreneurs, small business owners, and family-owned shops,” said Rep. Neguse. “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.”
“When small businesses face financial distress, they should have a practical path to reorganize and continue operating. 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. I’m pleased to support this bipartisan effort to provide greater certainty for small businesses,” said Rep. Lee.
Read the bill language HERE.
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