Amid the throes of the COVID-19 pandemic, industries across the U.S. economy have been impacted in unprecedented ways. Small businesses in the service industry, including restaurants, continue to experience significant disruption in their operations and correspondingly their ability to generate cash flow and profits. Since the outbreak of the virus, restaurants have experienced the forced closure of their dining rooms due to government orders, leaving only those that could operate at reduced capacity through take-out or delivery services. Consequently, U.S.
Widespread closures due to the COVID-19 pandemic have generated countless lawsuits across the country over missed rent payments. Defendants in these cases are often commercial tenants with conflicting obligations to pay rent under their leases, while also shuttering their doors in accordance with government stay-at-home orders.
The Fifth Circuit has waded into the debate on whether the SBA must make Paycheck Protection Program ("PPP") loans available to debtors in bankruptcy, clearly answering "No."
Analyzing the inner workings of the elements required for the securities contract “safe harbor” protection under Section 546(e) of the Bankruptcy Code, the Bankruptcy Court for the SDNY dismissed a complaint seeking to recover approximately US$1 billion in allegedly fraudulent transfers brought against various transferees as part of the Boston Generating Chapter 11 case.
The COVID-19 pandemic and forced shutdowns have wrought a wave of financial distress globally for individuals and businesses, large and small. Three months in, the effects of the shutdowns have begun to materialize in the United States in the form of bankruptcy filings. According to a recent report, in May 2020 alone, some 27 companies reporting at least $50 million in liabilities sought court protection from creditors.
Widespread closures due to the COVID-19 pandemic have generated countless lawsuits across the country over missed rent payments. Defendants in these cases are often commercial tenants with conflicting obligations to pay rent under their leases, while also shuttering their doors in accordance with government stay-at-home orders.
Through the CARES Act and subsequent legislation, Congress provided up to $659 billion in potentially forgivable loans to businesses impacted by the COVID-19 pandemic.
During this time of economic upheaval amidst the COVID-19 pandemic, many corporate borrowers are faced with the inability to service debt obligations, and creditors may seek to hold corporate officers and directors accountable as a result. In these uncertain times, it is wise to review the fiduciary duties of corporate directors and officers and the effects of financial distress on such duties.[1] The following Q&A provides guidance on this issue from a Delaware law perspective, as Delaware is the most commonly cited jurisdiction for corporate governance.
As most global markets attempt a return to normal (or a new form of normal) business, it is hard to imagine a sector or an industry that isn’t already reeling from the effects of the past three months. Getting back on your feet is hard enough in the current environment, without having to worry about further setbacks impacting your business. But how would you react if your key supplier called tomorrow to let you know that they were insolvent and unable to provide you with goods or services?