A new chapter has begun in the ongoing saga to clarify the role of the Federal Energy Regulatory Commission (FERC) in bankruptcy proceedings involving FERC-jurisdictional contracts. In a March 30 order, the FERC identified how it will exercise its jurisdiction under the Federal Power Act (FPA) concurrently with the Bankruptcy Court with regard to the proposed rejection of FERC-jurisdictional contracts in bankruptcy.[1]
The federal government made bankruptcy a viable option for small businesses with the passage of the Small Business Reorganization Act of 2019 (SBRA). The act, which became effective Feb. 19, is designed for smaller businesses that cannot afford the high administrative fees and costs associated with traditional Chapter 11 reorganizations.
Barely a month after Bankruptcy Code amendments providing a cheaper, more efficient path to chapter 11 relief for small businesses took effect under the Small Business Reorganization Act of 2019 (“SBRA”), Congress has nearly tripled the debt-eligibility threshold from roughly $2.7 to $7.5 million in response to economic fallout from the COVID-19 shutdown.
On February 19, the Small Business Restructuring Act (SBRA) — the most significant change to the Bankruptcy Code in 15 years — went into effect. The SBRA, also known as Subchapter V of Chapter 11, removed numerous barriers that had long prevented small businesses from reorganizing in bankruptcy. On March 27, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) went a step further and significantly expanded eligibility under Subchapter V by raising the debt limit from $2.7 million to $7.5 million. This overview answers key questions about how these new laws work.
State governments can be creditors of individuals, businesses and institutions that are debtors in bankruptcy in a variety of ways, most notably as tax and fine collectors but also as lenders. They can also be debtors of debtors, in their role, for example, as the purchasers of vast quantities of goods and services on credit. And they can also be transferees of a debtor’s property in (at least) every role in which they can be creditors.
As markets react to the Coronavirus Disease 2019 (COVID-19) pandemic, the trading prices of loans and notes have declined. In light of these developments, borrowers and their affiliates, including private equity sponsors, are considering whether to buy back outstanding debt at a discount. In analyzing the potential benefits and drawbacks of pursuing debt repurchases, borrowers and private equity sponsors should consider the following:
Outstanding Debt Documents
When Financial Stress Turns to Distress–Restructuring Tools to Avoid Disaster
Parts 1 and 2: Chapter 11 Checklist and What Else Is in the Toolbox
On March 27, Minnesota Gov. Tim Walz clarified that Executive Order 20-20, which directed Minnesota residents to stay at home, applies to debt collection professionals. Due to ongoing coronavirus (“COVID-19”) concerns, Executive Order 20-20, which will remain in effect until April 10, 2020, orders all persons living in the State of Minnesota to stay at home except to engage in exempted activities and critical sector work.
Ice Miller is carefully monitoring the rapidly changing developments of the coronavirus (COVID-19) pandemic. It is our goal to provide you with the most up-to-date information available, along with advice on best practices and strategies to minimize loss and maximize long-term financial stability.
Below are some strategies for assessing exposure and preparing and responding to bad debt, slow-paying or delinquent counter-parties, bankruptcies or related creditors' rights litigation. Note: The steps and strategies below should be pursued simultaneously despite the numbered steps.
The Coronavirus Aid, Relief and Economic Security Act of 2020 (“CARES Act”) which Congress approved last week, together with the Small Business Reorganization Act of 2019 (the “SBRA”) which became effective on February 19, 2020, will make Chapter 11 bankruptcy protection much more attractive for small business debtors.