The SBA’s Rules Exclude Bankruptcy Debtors from Relief Under the Paycheck Protection Program
A recent decision, In re: Grandparents.com, Inc.., et al., Debtors. Joshua Rizack, as Liquidating Tr., Plaintiff, v. Starr Indemnity & Liability Company, Defendant, Additional Party Names: Grand Card LLC, provides insight on the intersection between and among contract, tort, and fraudulent transfer theories of recovery.
On April 20, 2020, Massachusetts Governor Charlie Baker signed legislation suspending evictions of many residential and commercial tenants as well as halting the foreclosure of most residential properties. The new law, Chapter 65 of the Acts of 2020, “An Act providing for a Moratorium on Evictions and Foreclosures During the COVID-19 Emergency,” takes effect immediately and will remain in place until the earlier of August 18, 2020 or 45 days after Governor Baker lifts the Coronavirus Disease 2019 (COVID-19) emergency declaration.
In brief
The North America Tax Practice Group presented The Future of IP Planning, the fourth webinar in the series The Importance of Tax in the Response to COVID-19 on 1 May 2020.
The SBA’s Rules Exclude Bankruptcy Debtors From Relief Under the Paycheck Protection Program
The Bottom Line
Recent bankruptcy court decisions in In re Hidalgo and In re Cosi Inc. indicate that courts are split on whether the U.S. Small Business Administration (SBA) and participating lenders can deny Paycheck Protection Program (PPP) loans to businesses that are debtors in a pending bankruptcy proceeding.
The SBA’s Bankruptcy Exclusion
The Bottom Line
In Wheeling & Lake Erie Ry. Co. v. Keach (In re Montreal, Me. & Atl. Ry.), No. 19-1894 (1st Cir. Apr. 9, 2020), the First Circuit held that when determining the value of legal claims as collateral, the party with the burden of proof must establish the likely validity of the claim and the likelihood of recovery — demonstrating possible damages alone does not suffice.
What Happened?
Background
Recent weeks have witnessed seismic shifts in the oil and gas industry because of crashing oil prices, demand destruction associated with the COVID-19 pandemic, and crude oil storage reaching record capacity levels. Upstream producers are especially vulnerable to these market pressures and have begun shutting in wells, asserting force majeure, and cutting costs. As counterparties to distressed producers, midstream players face new challenges in navigating contractual relationships and mitigating risk.
This article was originally published on Law360.
The COVID-19 pandemic has caused, and continues to cause, massive humanitarian and economic upheaval with no clear end in sight. Borrowers are already scrambling to increase liquidity from their banks. Some will continue to operate openly, honestly, and in the best interests of the company and its stakeholders. Others will not.