The Supreme Court has lowered (but not eliminated) the risk that a creditor violates the automatic stay by retaining a debtor’s property post-petition. On January 14, 2021, the Supreme Court ruled 8-0 (Justice Barrett abstaining) that the “mere retention” of a debtor’s property does not violate section 362(a)(3) of the Bankruptcy Code. Chicago v. Fulton, 2021 WL 125106 (Jan. 14, 2021).

On December 14, 2020, the Bankruptcy Court for the Southern District of Texas in Chuck E. Cheese’s chapter 11 proceeding reaffirmed that section 365(d)(3) of the Bankruptcy Code generally requires commercial tenants in bankruptcy to continue to perform all of their lease obligations, including the payment of rent, subject to the bankruptcy court’s limited authority to modify the timing of performance for obligations that arise within the first sixty (60) days of the bankruptcy proceeding.

On June 11, 2020, the U.S. Court of Appeals for the 9th Circuit in Blixseth v. Credit Suisse, 961 F.3d 1074 (2020), held that a chapter 11 plan may contain a “narrow exculpation clause” that releases claims against non-debtor parties for actions relating to the plan approval process. Although the opinion does not endorse broad nonconsensual third party releases that are available in certain other circuits under limited circumstances, it nevertheless opens the door to additional protections for creditors that typically take an active role in chapter 11 cases.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) went into effect. While coverage of the CARES Act has focused primarily on tax relief and provisions to extend loans and other forms of assistance to impacted businesses and individuals, the law also temporarily expanded eligibility for companies seeking bankruptcy protection under the recently enacted Small Business Reorganization Act of 2019 (“SBRA”).