On August 16, 2021, the US Court of Appeals for the Fifth Circuit held that an individual guarantor remained liable for more than $58 million in commercial debt, despite the individual’s claims that the lenders induced him to provide the guaranty under duress. See Lockwood International, Inc. v. Wells Fargo, NA, et al., Case No. 20-40324 (5th Cir. Aug. 16, 2021).
COVID-19 M&A Lessons
On April 29, 2021, the United States Court of Appeals for the Fourth Circuit issued its decision in Siegel v. Fitzgerald (In re Circuit City Stores, Inc.), Case No. 19-2240 (4th Cir. Apr. 29, 2021), upholding the constitutionality of a 2017 law that substantially increased the quarterly fees debtors are required to pay to the Office of the United States Trustee (the “US Trustee”) in chapter 11 bankruptcy cases.
On March 31, 2021, the United States Bankruptcy Court for the District of Nevada awarded attorney’s fees to a debtor under a Nevada fee-shifting statute for objecting to a time-barred proof of claim.1 The opinion serves as a warning that filing a proof of claim for time-barred debt may carry consequences other than claim disallowance despite the Supreme Court’s recent holding in Midland Fu
A year ago, many predicted that the COVID-19 stay-at-home orders and social distancing guidelines and their impact on the economy would result in a deluge of bankruptcy filings that could rival the Great Recession of 2008-2009. However, as we approach the one-year anniversary of former President Trump declaring the SARS-CoV-2 novel coronavirus a national emergency, that prediction has not come to pass.
On January 14, 2021, the U.S. Supreme Court issued its decision in City of Chicago, Illinois v. Fulton, __ U.S. __, 2021 WL 125106 (Jan. 14, 2021), which addresses issues related to the automatic stay and a creditor’s ability to retain property of a debtor’s estate upon the commencement of a bankruptcy case. The Fulton decision is a consolidation of four similar cases where the City of Chicago impounded debtor cars pre-petition in response to unpaid traffic tickets and fines. After filing for bankruptcy, each debtor requested that the City return the respective vehicles.
The COVID-19 pandemic has forced big-name brands to pursue unique strategies to secure fiscal relief.
Since the early days of the COVID-19 crisis in the U.S., it has been a recurring theme to turn on the news and see that yet another big-name retailer is rumored to be on the brink of filing, or has already filed, for bankruptcy.
Summary
Landlords are receiving a deluge of requests to provide rent relief to commercial tenants whose operations have either been closed or substantially restricted as a result of state and local governments’ COVID-19 stay-at-home orders and related restrictions. Some tenants are using the threat of a bankruptcy filing as leverage to obtain these concessions. Meanwhile, landlords are facing their own challenges with mortgage lenders and servicers as they try to service real estate loans with limited available cash.