On March 27, 2020, President Donald J. Trump signed a $2 trillion stimulus package in response to the unprecedented chilling impact of COVID-19 on the U.S. economy. With the goal of providing widespread economic relief to an economy which unexpectedly has ground to a halt, the Coronavirus, Aid, Relief and Economic Security Act (“CARES Act”) temporarily provides greater access to bankruptcy relief for small businesses.
On Friday, March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides $2 trillion in economic stimulus for industries and individuals faced with challenges from the COVID-19 coronavirus.
No one can yet predict the overall effect the COVID-19 pandemic will have on the economy in the long run. However, the immediate impact on small businesses seems readily apparent. The dramatic disruption has impeded cash flow and upset daily operations to the point that some business owners question whether recovery is possible.
Should a business find themselves in that unfortunate position, there is relief available under Chapter 11 of the Bankruptcy Code, but the Chapter 11 process can be unwieldy and expensive for small or even medium-sized businesses.
Following Wednesday night’s late-night Senate passage of the Coronavirus Aid, Relief and Economic Security (CARES Act), the bill was sent to the House of Representatives. The House will convene Friday morning at 9:00 a.m. to begin consideration of the CARES Act (H.R. 748).
The CARES Act expands earlier versions of two pieces of legislation to help individuals and businesses harmed by the COVID-19 pandemic.
As the U.S. energy industry comes to grips with the most dire economic crisis in its history, wrought by an invisible virus and global oil price war, and with many exploration and production (E&P) producers substantially adjusting their capital and maintenance budgets, all parties must carefully assess their partners’ financial positions. The bankruptcy filing of a joint venture partner (whether operator or nonoperator) can lead to substantial problems for the other joint venture partner(s) and potentially hamstring operations on the co-owned lands.
Please note: The below information may require updating, including additional clarification, as the COVID-19 pandemic continues to develop. Please monitor our main COVID-19 Task Force page and/or your email for updates.
Section 1113 – Bankruptcy
Buried in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which is expected to be passed by Congress and signed by the President today, are revisions to the Bankruptcy Code that are relevant to creditors dealing with distressed debtors. Most notably, the bill will impact the recently-enacted Small Business Reorganization Act of 2019 (the “SBRA”) by increasing the potential pool of qualified debtors.
As the COVID-19 financial turmoil escalates, many businesses are asking themselves, “but for the virus, I had a profitable and successful business. What can I do to survive a short term liquidity crisis?” Businesses may be able to utilize a litany of remedies in Chapter 11 to assist in weathering the current, but hopefully, short lived recession.
The economic impact of the COVID-19 coronavirus remains uncertain, but many are preparing for an up-tick in bankruptcies and, in particular, 363 transactions – sales of assets pursuant to Section 363 of the US Bankruptcy Code. Here are some practical steps that can help you prepare for your own 363 process and finding your stalking horse.
Across the country, the COVID-19 pandemic has significantly impacted the justice system. In many State and Federal courts, jury trials have been suspended and court hearings are limited to only criminal and emergency civil matters. Yet the Bankruptcy Courts, given the unique role they play in times of financial distress, are largely open for business, relying on electronic filing and conducting hearings by teleconference.