The Small Business Reorganization Act: An Enticing Menu Option for Restaurants in Trouble

It has been reported that in the six months from March through August 2020, a total of 32,109 restaurants have closed with 19,590 of the closures expected to be permanent.  In fact, the restaurant industry recently surpassed retail as the industry with the highest number of business closures since the onset of COVID-19.

The short-term outlook is not much better.  While all states have allowed restaurants to reopen to some extent, most states have imposed capacity limits and distance requirements.  Because restaurants typically run on thin profit margins and rely on high volume, COVID-related restrictions produce significant negative impacts, especially on small business restaurants.  Some may have stayed alive with government loans or grants, but other than the short-lived Paycheck Protection Program, which officially concluded on August 8, 2020 after dispersing approximately $525 billion, additional government assistance has not been forthcoming.  

Facing an uncertain…