Earlier this year, Chapter 11’s new Subchapter V became a part of the Bankruptcy Code when the Small Business Reorganization Act of 2019 (SBRA) became effective.
On 1 August 2020, the Companies (Miscellaneous Provisions) (COVID-19) Act 2020 (Act) was signed into law. This legislation, due to commence soon, will address certain specific company law issues arising because of the ongoing and unprecedented Coronavirus (COVID-19) crisis.
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In practice, it is not uncommon for bankruptcy debtors to file suit against creditors or debt collectors for stay and discharge injunction violations. Often, they will do so before making any meaningful attempt to communicate with the creditor or debt collector to request that they stop their improper collection efforts.
On 20 July 2020, the Companies (Miscellaneous Provisions) (COVID-19) Bill 2020 (the Bill) was initiated in Seanad Éireann (the upper house of the Irish parliament). This proposed legislation seeks to address certain specific company law issues which have arisen in the context of the ongoing and unprecedented Coronavirus (COVID-19) crisis.
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The Office of the Director of Corporate Enforcement (ODCE) has recently issued welcome guidance on how the impact of COVID-19 will be considered by the ODCE when evaluating potential restriction cases in respect of directors of insolvent companies – see here.
In the very unusual period in which we find ourselves today, it seems to be common wisdom that an avalanche of commercial loan defaults is coming. As such, it is a good time to take a fresh look at the terms and provisions used in commercial workout documents, whether in a simple agreement that extends a maturity date or in a complex forbearance document that restructures the collateral arrangement and financial covenants.
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COVID-19 Webinar Series
On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was signed into law and provided an additional $310 billion for the Paycheck Protection Program (PPP). The Small Business Administration (SBA) resumed accepting PPP loan applications on April 27, 2020. In light of the quick exhaustion of initial PPP loan funds, eligible businesses should apply for PPP loans soon to increase the likelihood of receiving available funds.
The SBA has also provided additional guidance for entities applying for loans.
Small businesses often struggle to reorganize in bankruptcy. To address this issue, Congress passed the Small Business Reorganization Act of 2019 (the SBRA). The SBRA took effect in February 2020 and makes small business bankruptcies faster and less expensive.
There have been debates for years about the pros and cons of owners withholding retainage (usually 5% or 10%, depending on each state’s retainage laws or local “industry standard”) from prime contractors. Typically, the primes will, in turn, withhold retainage from all subcontractors. However, in these crazy times, when the future of private and public projects is unknown and profit margins are in question, it might be a good time to revisit this issue.