It was only a matter of time. On January 12, 2021, the Department of Justice (“DOJ”) announced that it had reached its first civil settlement regarding allegations of fraud related to the Paycheck Protection Program (“PPP”).1 DOJ settled a $4.2 million claim against a bankrupt internet retailer and its president for $100,000. Although unique to the case’s specific allegations, the settlement reveals activities that may be alleged as PPP fraud, statutes at DOJ’s disposal to pursue civil enforcement, and terms by which DOJ will resolve PPP fraud allegations.
Along with a tense election south of the border, 2020 brought COVID-19 and its attendant devastating loss of life and far-ranging economic implications, both positive and negative. The world now looks to 2021 with significant uncertainty with respect to what comes next. Certain sectors of the economy, in particular, may be irreparably damaged.
It is common for E&P companies in chapter 11 to seek to reject burdensome midstream contracts under Bankruptcy Code § 365. Rejection has not been permitted by bankruptcy courts where such agreements create enforceable covenants running with the land (“CRWL”) because a CRWL is a real property interest of the midstream gatherer, not just a contract right. Accordingly, before a debtor can seek to reject midstream agreements, the bankruptcy court must first determine whether an enforceable CRWL exists.
In Chandos Construction Ltd. v Deloitte Restructuring Inc., the Supreme Court of Canada confirmed the application of the common law anti-deprivation rule in the context of a Bankruptcy and Insolvency Act (BIA) proceeding.
Earlier this year, the Ontario Court of Appeal released its decision in Urbancorp Cumberland 2 GP Inc. (Re)[PDF], which clarifies the scope and effectiveness of a section 9(1) vendor’s trust under the Ontario Construction Lien Act in insolvency proceedings.
On August 26, 2020, the U.S. Court of Appeals for the Third Circuit affirmed Delaware Bankruptcy Judge Kevin Carey’s order confirming the Tribune Company’s chapter 11 plan.1 As a matter of first impression, the Court held that the prohibition against “unfair discrimination” in cramdown plans supplants the requirement that subordination agreements be enforced in bankruptcy. The decision comes more than eight years after Judge Carey initially entered the Bankruptcy Court order, and follows years of appeals by the senior noteholders.
On July 20, 2020, the Court of Appeal of Québec (the QCA) released its reasons in Séquestre de Media5 Corporation,[1] putting an end to a long-lasting debate on the availability of national receivers to Québec secured creditors.
The COVID-19 pandemic has heavily disrupted our lives, communities, and businesses. Even with new approaches, not all businesses can overcome the substantial challenges brought by the pandemic. Lending programs like the Paycheck Protection Program have brought temporary relief, but many small businesses remain exposed to financial difficulties and face a real risk of bankruptcy.
New Small Business Provisions in Bankruptcy Code
On June 22, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued an order concluding that the Commission and the United States Bankruptcy Courts have concurrent jurisdiction to review and address the disposition of natural gas transportation agreements (“FERC-jurisdictional agreement”) sought to be rejected through bankruptcy.
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.