Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
A number of legislative modifications were made to the Bankruptcy Code to reduce the economic impact of the COVID-19 pandemic on distressed debtors, particularly small business and individual debtors. While a few of these changes expanded protections previously granted to small business debtors pre-pandemic, a major pandemic relief program, the Paycheck Protection Program (PPP) was not made available to debtors in bankruptcy proceedings. After Congress established the PPP in The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), enacted on March 27, 2020, a number of debtors in pending bankruptcy cases applied for PPP loans. The Small Business Administration (SBA) opposed PPP loans for debtors, and courts were split as to whether the SBA could block debtors from qualifying for and receiving PPP loans. Two circuit courts, the Eleventh and the Fifth Circuits, ultimately ruled against the debtors. USF Federal Credit Union v. Gateway Radiology Consultants, P.A., No. 20-13462 at 43 (11th Cir. 2020) (holding that the SBA did not exceed its authority in adopting the non-bankruptcy rule for PPP eligibility).
*May exclude premium content
By Adam Shpeen, Aryeh Ethan Falk and Stephen Ford
Two Recent Cases Shed Light on Potential Risks to Preferred Equity Holders in Chapter 11
Preferred equity is a varied and flexible instrument, but, in practice, it typically has a limited number of common features. One feature is that it is entitled to a “liquidation preference” ahead of common stock. Whether the liquidation preference of preferred equity entitles preferred shareholders to priority over common shareholders in a Chapter 11 reorganization is a question that figured prominently in two recent high profile cases.
By Michael L. Cook
“Good-faith purchasers enjoy strong protection under [Bankruptcy Code] §363(m),” but the silent asset buyer (“B”) with “actual and constructive knowledge of a competing interest” lacks “good faith,” held the U.S. Court of Appeals for the Seventh Circuit.
By David E. Sklar and Cheryl A. Santaniello
Federal bankruptcy courts have been unavailable to marijuana businesses due to the Schedule I status of marijuana. The United States Trustee’s policy is to move to dismiss or object in each case involving marijuana assets, because they cannot be administered under the Bankruptcy Code.
By By Stuart B. Newman and Steven H. Newman
The Small Business Reorganization Act created a new pathway for small businesses to remain in control of running their businesses, which is the usual reason for choosing to seek relief under Chapter 11, while eliminating many of the reasons that typical Chapter 11 proceedings exhausted the patience, and wallets, of both debtors and creditors.