In light of the ongoing economic impacts of the COVID-19 pandemic, and although Chapter 11 of the U.S. Bankruptcy Code pertains to many industries, there are certain real estate related provisions of which owners and tenants should remain particularly aware in planning strategies to cope with the fallout from the current health crisis.

To raise awareness in that regard, the following is a general summary of some of the more critical provisions of the Code.

Single Asset Real Estate Entity

The newly enacted Coronavirus Aid, Relief and Economic Security Act (CARES Act) contains some significant bankruptcy-related provisions, including those which amend the Small Business Reorganization Act of 2019 (SBRA) to make bankruptcy relief available to an increased number of small businesses.

For those who are contemplating the need to develop a bankruptcy strategy – and for creditors evaluating a debtor’s bankruptcy plan – it is important to understand these changes in the law.

Today, February 19, 2020, the Small Business Reorganization Act of 2019 (SBRA) becomes effective. Signed into law on August 23, 2019, this new subchapter to Chapter 11 reorganization is available to address problems encountered by small business debtors in reorganization under the provisions of the United States Bankruptcy Code.

SBRA is intended to facilitate the reorganization of a small business, with the goal of making small business bankruptcy proceedings more efficient and economical. The key components of SBRA are as follows:

Mark your calendars! The New Jersey Department of the Treasury recently announced a new one-time program authorized by recent legislation aimed at improving government-to-business interactions.

The Streamlined Business Reinstatement and Dissolution Program offers businesses that are currently in “revoked status” – due to not having complied with the state’s administrative reporting requirements – an expedited path to reinstatement or dissolution, both notoriously time-consuming and expensive processes.

In re Passarella, 2011 Bankr. LEXIS 53 (2011)

On February 16, 2016, the U.S. District Court for the District of New Jersey handed down an important victory for condominium associations in the matter of Whispering Woods Condo. Ass'n v. Rones (In re Rones), reversing a published U.S. Bankruptcy Court for the District of New Jersey decision which would have enabled delinquent condominium owners to "strip or cram down" their entire association debt in a Chapter 13 bankruptcy with the exception of six months of maintenance fees.

On June 11, 2015, the United States Bankruptcy Court for the District of New Jersey recognized that a condominium association’s lien is entitled to a limited six-month priority over a first mortgage.