On March 27, 2021, President Biden signed into law the COVID-19 Bankruptcy Relief Extension Act (the Extension Act). The Extension Act temporarily extends certain COVID-19 bankruptcy relief provisions enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), which were further amended and/or extended as part of the Consolidated Appropriations Act (the CAA). Certain of the amendments included in the CAA and the Extension Act are highlighted below:
Debtors and Paycheck Protection Program Loans
On 1 March 2021, Brazos Electric Power Cooperative, Inc. (“Brazos”) commenced a chapter 11 bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas. Brazos is a Texas-based non-profit electric cooperative corporation that provides wholesale electricity to its members, which, in turn, provide retail electricity to Texas consumers.
The long-anticipated wave of civil enforcement actions involving participants in the Paycheck Protection Program (PPP) has begun.
A comprehensive change to German insolvency and restructuring law has become effective starting 1 January 2021. The change allows that a company's reorganization is possible without insolvency and includes the majority decision of its creditors.
On January 12, 2021, the Department of Justice (DOJ) announced the first civil settlement resolving allegations of fraud involving loans issued pursuant to the Paycheck Protection Program (PPP). SlideBelts Inc., an internet retail company, and Brigham Taylor, the company’s president and CEO, agreed to pay $100,000 in penalties and damages to resolve alleged violations of the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
The Federal Court has today sensibly ruled that security interests do not vest in the company grantor simply because the company had at some time previously been in liquidation, administration or subject to a deed of company arrangement (DOCA). This decision should come as a great relief to secured lenders and suppliers to companies that have successfully passed through a restructuring and have resumed "business as usual".
Executive summary
On a UK company’s insolvency, the UK tax authority (HMRC) will become a preferential creditor in respect of certain unpaid taxes (Crown Preference) with effect from 1 December 2020. Despite lobbying against the move (including in light of the COVID-19 pandemic), the UK government has persisted with the change, perhaps in an attempt to shore up its tax take.
The reform in context
On October 27, 2020, the National Labor Council (NLC) adopted a new set of recommendations (Advice no. 2.184 – you can find the full text here). These recommendations result from and are in line with the agreement reached by the social partners on December 17, 2019 (see our Alert of January 14, 2020).
What is the Cape Town Convention?