Both commercial landlords and tenants continue to struggle from governmental lockdowns and financial pressures. Recent bankruptcy decisions have added an additional layer of financial distress on commercial landlords by: (i) reducing commercial tenants' rent based on the subject lease's force majeure provision and governmental pandemic orders and (2) ignoring commercial tenants' requirement of timely payment of post-bankruptcy rent and allowing commercial tenants to "pause" payment of rent consistent with the governmental “stay” orders issued because of the COVID-19 pandemic.

NORTHERN DISTRICT OF ILLINOIS BANKRUPTCY COURT HOLDS THAT EXECUTIVE ORDER BARRING RESTAURANT OPERATIONS ON-PREMISES IN LIGHT OF COVID-19 IS A FORCE MAJEURE EVENT THAT PARTIALLY EXCUSES DEBTOR RESTAURANT’S PAYMENT UNDER THE LEASE

Samantha Gilbert speaks to compliance leaders from the healthcare, financial services, insurance, IT and commercial sectors on what to expect from the new “business as usual” and enforcement. Conduct reviews, increased regulatory scrutiny and long-term digitisation are some key issues for compliance teams to prepare for.

One Court Reverses Itself and Others Expose Eligibility Loopholes

Several recent bankruptcy court decisions reveal that a temporary restraining order prohibiting the Small Business Administration (SBA) from enforcing its rule that a debtor in bankruptcy cannot qualify for a Paycheck Protection Program (PPP) loan (the Bankruptcy Exclusion) is not necessarily a reliable predictor of ultimate success on the merits, and some courts have permitted end runs around the Bankruptcy Exclusion, empowering debtors to take advantage of those loopholes.

Lexology Pro Compliancetakes a look at some of the most informative articles published on Lexology this fortnight for compliance teams to stay up-to-date, including key guidance from regulators around the world and practical tips to help businesses adapt to a new normal.

Although COVID-19 has slowed consumer spending, the pandemic may result in retailers and brands searching for good deals, such as JC Penney. Penney’s has announced that it plans to close roughly 240 of its 846 stores permanently over the next two years as part of its turnaround starting with its recent bankruptcy filing.

With the onset of closures and quarantines early this year due to the spread of COVID-19, businesses across the country were confronted with the issue of how to perform their contractual obligations while they were unable to operate under normal conditions (or, in some cases, unable to operate at all). In many instances, they could not.

What does "bankrupt" mean?

The word “bankrupt” comes from the Italian banca rotta, meaning “broken bench.” In Italy, money dealers worked from benches or tables. If a money dealer ran out of money, his bench or table was broken in half and he was out of business. The word had its French equivalent, banqueroute, and subsequently made its way into the English language as both a figure of speech and a literal definition of what happened to the affected person.

Highlights

More than a third of the world’s population is under lockdown to slow the spread of COVID-19. The virus and these responsive measures have heavily disrupted lives, communities, and healthcare systems. Many businesses have been forced to change their operations. COVID-19 is rapidly pushing companies to operate in new ways, and the resilience of systems is being tested as never before.