U.S. District Court for the Eastern District of Louisiana, May 13, 2020

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, qualifying businesses may seek up to $10 million under the Paycheck Protection Program (PPP) for funding payroll and business expenses. The US Small Business Administration (SBA) guarantees the loans, and the full principal amount of the loans and any accrued interest may qualify for loan forgiveness. For many businesses, PPP loans have served as a lifeline during the COVID-19 pandemic.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act.”The legislation includes a historic $2 trillion aid package intended to stabilize the U.S. economy and provide disaster relief aid to American citizens and businesses impacted by the COVID-19 pandemic. The emergency aid package, which is by far the largest in American history, contains many provisions focused on providing relief. Among these are certain temporary amendments to Title 11 of the United States Code (the “Bankruptcy Code”).

INTRODUCTION

In times of unprecedented market uncertainty, assessing financial exposure to your counterparties is essential. Volatility in the commodities markets and a public health crisis create the perfect storm for financial distress for companies in nearly every industry. Risk is inherent in business and that risk is heightened when you are dealing with a company in financial distress. Managing these risks begins with knowing your counterparties and understanding your legal position with respect to those counterparties.

Countries across the world are actively taking measures to stem the spread of COVID-19 by encouraging and, in some cases, forcing social distancing. One of the most common measures employed so far is the closing of non-essential stores, bars and restaurants for several weeks, if not longer. Several large retailers, such as JCPenney, Ross Stores, Kirkland’s Inc., Marshalls and TJ Maxx, have announced store closings for two weeks in efforts to help stop the spread of COVID-19.

During these uncertain times, bankruptcy courts across the country remain steadfast in their commitment to serve the public and provide critical relief to debtor companies and their many constituents, including employees, lenders, and other parties in interest. To address public concern about COVID-19 and to protect all parties, many bankruptcy courts have issued general orders implementing procedures and adopting protocols that balance public health and safety with parties’ need for emergency relief from the court.

United States Bankruptcy Court, D. Maryland. March 02, 2020

The plaintiffs were various entities who filed for bankruptcy protection under Chapter 11 in 2001. Their bankruptcy confirmation order set a bar date for the filing of claims by creditors against the entities. Nearly 16 years later, asbestos claimants filed claims for exposure to asbestos in Pennsylvania. The plaintiffs then filed suit against the asbestos claimants as an adversarial bankruptcy proceeding. Motions for summary judgment were filed by both sides.

United States Court of Appeals, Second Circuit, February 19, 2020

United States Court of Appeals Third Circuit, February 18 2020

DELAWARE – The appellants are latent asbestos claimants who did not file by the bar date set by Chapter 11 bankruptcy but who were subsequently diagnosed with mesothelioma. The appellee is Energy Future Holdings Corporation (EFH), which was a holding company for several energy properties. Those subsidiaries became defunct long ago as a result of asbestos litigation. EFH also filed for bankruptcy as a result of vast sums of money owed to asbestos debtors. The reorganization plan called for a notice period to latent claimants followed by a subsequent bar date for claims.