The government has confirmed that restrictions on commercial landlords on presenting a winding-up petition against tenants that have not paid rent are to be extended to the end of 2020.

The announcement follows confirmation last week that it has extended its moratorium preventing the eviction of commercial tenants for non-payment of rent until the end of 2020.

Whilst the announcement will be welcomed by tenants supporting them into the important Christmas trading period, landlords will undoubtedly feel that their own financial position is being ignored.

This is the second of two articles considering the corporate insolvency aspects of the Corporate Insolvency & Governance Act 2020 (the Act).  In the first article, we looked at the temporary measures introduced by the Act in response to the Covid-19 crisis and this second article explains the permanent reforms of insolvency law provided for in the Act.  These changes came into effect on 26 June 2020.

In a case litigated by the authors, the United States Court of Appeals for the Seventh Circuit held in In re Marzieh Bastanipour, Case No. 20-1373 (7th Cir. June 10, 2020) that Chapter 13 debtors are not permitted in forma pauperis fee waivers absent a showing of extraordinary circumstances.

In 2018, the Debtor, Marzieh Bastanipour, filed a Chapter 13 bankruptcy petition in the U.S. Bankruptcy Court for the Northern District of Illinois. This was the third Chapter 13 petition filed by the Debtor since 2013.

This first article comments on the temporary measures that are designed to alleviate the economic impact of COVID-19, namely the suspension of wrongful trading and restrictions placed on creditors serving statutory demands and winding-up petitions. These temporary provisions are intended to provide businesses with some breathing space during the current pandemic whilst they consider rescue options.

Force majeure clauses and the doctrines of impossibility and/or impracticability remain among the most-discussed legal topics of the COVID-19 pandemic. Courts across the country, finally open, are grappling with those issues and giving some insight as to how these topics may play out in future cases.

The decisions made and actions taken, or not taken, by companies and their directors in response to the COVID-19 crisis are being intensely scrutinised by regulators, shareholders, and creditors alike. It is anticipated that some businesses may face claims relating to their poor contingency planning and their practical and wider reactions to the crisis. So, an increase can be expected in claims on directors and officers (D&O) insurance policies.

Seyfarth Synopsis: In acquiring a company in bankruptcy, there is often a tendency to think this guarantees the purchaser will be “free and clear” of any liability (including so-called “successor liability”). This is not necessarily so with wage and hour liability, particularly if the purchaser merely continues to operate virtually the same business that was acquired.

Courts continue to address constitutional and statutory challenges to COVID-19-related legislation and governmental orders. Among them, courts are examining eligibility for PPP loans under the CARES Act, as well as the constitutionality of “stay at home” and similar orders restricting activities.

PPP loans under the CARES Act

The High Court has dismissed applications to restrain the presentation of winding up petitions for reasons relating to the Covid-19 pandemic.

The COVID-19 pandemic and the drastic measures taken in an effort to mitigate its adverse impact have sent shock waves throughout the US and global financial systems. COVID-19 and measures including travel bans, shelter-in-place orders and widespread business closures have caused precipitous changes in customer spending and demand, supply chain disruptions, sharp declines in revenue and other operational challenges across a wide range of economic sectors. Businesses worldwide now confront unprecedented and mounting challenges and distress.