On December 27, 2020, in response to the economic distress caused by the COVID-19 pandemic and to supplement the CARES Act enacted in March 2020, the Consolidated Appropriations Act of 2021 (the “Act”) was enacted. In addition to providing $900 billion in pandemic relief, the Act benefits both debtors and creditors by temporarily modifying the following sections of the Bankruptcy Code, which may be of particular interest to creditors:
The total value of U.S. retail deals last year reached $36 billion—roughly three times the $13.9 billion of in 2019. This was despite the pandemic, or perhaps in part because of it
After bringing dozens of criminal charges against Paycheck Protection Program loan recipients in recent months, on January 12, the US Department of Justice announced its first civil settlement resolving allegations of PPP loan fraud.
On December 27, 2020, the Consolidated Appropriation Act of 2021 (the “CAA“) was enacted to provide additional coronavirus stimulus relief for businesses challenged by the ongoing Covid-19 Pandemic. In doing so, the CAA includes several targeted, but temporary, changes to the Bankruptcy Code (the “Code”) which will have implications for lenders, landlords, vendors and other creditors. Absent further legislation, these changes will sunset on December 27, 2022, but will continue thereafter to affect cases filed prior to that date.
In a recent decision, the Court of Appeals for the Sixth Circuit held that the election of a tenant, under Section 365(h) of the Bankruptcy Code, to remain in possession of real property governed by a rejected lease causes a third-party guaranty on another rejected agreement to remain in effect, to the extent such agreement and the lease are part of an integrated transaction.
On January 19, 2021, the United States District Court for the Western District of Wisconsin granted a motion to dismiss filed by a consumer reporting agency in Ewert v. FD Holdings, LLC d/b/a Factual Data, 2021 WL 168967 (W.D. Wis. Jan. 19, 2021). The plaintiff, Lance M. Ewert, filed a bankruptcy petition in 2017, identifying a Chase credit card account as a disputed debt. The credit card debt was ultimately discharged in the bankruptcy case.
On 20 January 2021, the UK High Court approved the convening of a single scheme meeting for certain aircraft lessors of MAB Leasing Limited (MABL) in relation its proposed UK scheme of arrangement. This is an important step towards the implementation of a wider restructuring for the Malaysia Airlines group, but may also have wider implications on the restructuring options available not only to airlines, but also to businesses with other leased assets, including real estate.
Lessors form a single class
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).
Automatic Stay Not Violated by Retention of Property Seized Before Filing
The United States Supreme Court recently held that 11 U.S.C. § 362(a)(3), a provision of the automatic stay of the U.S. Bankruptcy Code, does not require creditors to take affirmative steps to return property that was seized before the filing of a debtor’s bankruptcy petition. City of Chicago, Illinois v. Fulton, 2021 WL 125106, ____ U.S. ____ (Jan. 14, 2021).
On December 27, 2020, President Donald J. Trump signed the Consolidated Appropriations Act of 2021 (“CAA”) into law. The CAA was enacted in part to expand the economic stimulus relief provided by the Coronavirus, Aid, Relief and Economic Security Act (“CARES Act”) signed into law six months earlier. Like the CARES Act, the CAA temporarily modifies the Bankruptcy Code to provide greater protections for debtors and certain creditors in bankruptcy.