In what appears to be more good news for those with student loan debt, the Tenth Circuit recently joined the Fifth Circuit by holding that certain private student loans are dischargeable in bankruptcy.

In McDaniel v. Navient Solutions, LLC, No. 18-1445 (10th Cir. Aug. 31, 2020), the Tenth Circuit held that an educational loan does not constitute “an obligation to repay funds received as an educational benefit” under Section 523(a)(8)(A)(ii) of the Bankruptcy Code.

Section 523(a)(8) of the Code provides, in pertinent part:

On September 29, 2020, the House Judiciary Committee advanced H.R. 7370, Protecting Employees and Retirees in Business Bankruptcies Act of 2020, a Democrat-sponsored bill, to the full chamber. If enacted into law, the bill would usher in considerable changes in commercial bankruptcy cases, including in the areas of executive compensation, employee and retiree benefits, and confirmation of a Chapter 11 plan. Some of the more salient provisions of the bill are listed below; for the complete text of H.R.

The Budget reaffirmed the Government’s commitment to implementing reforms to support consumers and businesses affected by COVID-19.

The Government confirmed the implementation of a number of measures designed to reduce the regulatory burden to ensure a timely flow of credit and resolution for distressed business. These include:

In recent years, market participants have watched with interest from across the Atlantic as U.S. out-of-court liability management and restructuring transactions moved material assets out of the creditors' collateral pools, to enhance liquidity, to raise additional debt or to extend the maturity of existing debt. Many have wondered when these sort of transactions will reach European shores.

That moment has now arrived.

INTRODUCTION

The torrid pace of bankruptcy filings by U.S. businesses has ebbs and flows, but the tide is not receding. The economy continues to struggle under the weight of the COVID-19 pandemic.

There has not been any substantial change in the fundamentals of the business cycle and Washington has been unable to produce another round of stimuli. So, we need to be careful about drawing conclusions from any short term variance in the rate of bankruptcy filings.

Brick and mortar retail businesses, including restaurants, have faced especially difficult challenges during COVID-19. Under the various stay-at-home and shelter-in-place orders that have been issued by state governors, retail stores had no choice but to close for weeks or months. Stores that have been able to reopen are operating at limited capacity due to social distancing guidelines. With either no sales or greatly reduced sales, retail companies have had trouble generating enough revenue to pay rent and many have had to close permanently.

On September 29, 2020, the United States House of Representatives Committee on the Judiciary advanced a Democrat-backed bill to the full chamber that seeks to address perceived shortcomings in the Bankruptcy Code’s protections for employee and retiree benefits and to curtail the use of bonuses and special compensation arrangements for executives in bankruptcy cases.

Sarah Banda U.S. Bankruptcy Court (N.D. Ga.); Atlanta On May 15th, JCPenney announced that the company was filing for chapter 11 relief. Another in a trend of major retailers filing for bankruptcy. JCPenney's announcement was expected, as forced closures in the pandemic exacerbated the company's pre-COVID financial problems.1 However, what raised some eyebrows is the company's plan to spin its properties into a real estate investment trust (REIT) as a part of its proposal to emerge from bankruptcy.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Small Business Reorganization Act of 2019 (SBRA) provide useful options for small business debtors (i.e. those whose debts are less than $7.5 million) considering Chapter 11 bankruptcy protection. However, to reap the benefits of these Acts, small business debtors may need to act quickly, as some of the key benefits of the CARES Act are scheduled to sunset on March 27, 2021.

In In re Smith, (B.A.P. 10th Cir., Aug. 18, 2020), the U.S. Bankruptcy Appellate Panel for the U.S. Court of Appeals for the Tenth Circuit recently joined the majority of circuit courts of appeals in finding that a creditor seeking a judgment of nondischargeability must demonstrate that the injury caused by the prepetition debtor was both willful and malicious under Section 523(a)(6) of the Bankruptcy Code.

Factual Background