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Though it appeared the smoke might blow in a more favorable direction, the hopes of marijuana-adjacent businesses using the Bankruptcy Code were snuffed out once again by the Bankruptcy Court in Colorado. The Controlled Substances Act (the CSA) makes it illegal to rent, lease, or make available for use or profit from a location for the manufacture, storing, or distribution of controlled substances. Federal law generally imposes criminal liability for aiding and abetting the unauthorized manufacture, distribution, or dispensing of marijuana, which is a Schedule 1 controlled substance. A number of courts have ruled that businesses whose operations constitute federal crimes cannot take advantage of the federal bankruptcy system.[1] Bankruptcy courts have even dismissed cases where the debtor does not operate a cannabis business, but operates ancillary businesses such as the manufacture or sale of equipment that may be used to
North Texas woman sentenced to federal prison for bankruptcy fraud scheme (Source: Raycom News Media) By KLTV Digital Media Staff | January 21, 2021 at 3:16 PM CST - Updated January 22 at 1:19 AM
SHERMAN, Texas – A 47-year-old Arlington woman has been sentenced to federal prison for a bankruptcy fraud scheme in the Eastern District of Texas.
Cotriena Machelle Embers pleaded guilty on August 10, 2020 to bankruptcy fraud, wire fraud and aggravated identity theft and was sentenced to 42 months in federal prison today by U.S. District Judge Amos Mazzant. The judge left open the possibility of ordering restitution to the identity theft victim in the case.
Some of the key amendments include:
PPP Loans for Corporate Debtors
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), enacted in March, 2020, established the Paycheck Protection Program (PPP) which offered forgivable loans to qualifying small businesses. Initially, the Small Business Administration (SBA) refused to issue PPP loans to debtors, but under the amendments to Section 364 of the Code corporate debtors may be eligible for PPP loans with the authorization of the bankruptcy court. However, this amendment will not become effective unless and until the SBA Administrator submits a letter to the Office of the United States Trustee acknowledging that debtors qualify for CARES Act funding. Assuming the SBA Administrator permits the issuance of PPP loans to debtors, PPP loans for each individual corporate debtor will only be issued upon the approval of the bankruptcy court. The period to apply for PPP funding under the CAA expires on March 31, 2021.
With the COVID-19 pandemic stretching on into another year, businesses continue to experience adverse effects. Bankruptcy filings, especially among retailers, were higher than average.
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On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA 2021). Similar to the March 2020 CARES Act, several temporary changes to the Bankruptcy Code are included in Title X of the CAA 2021. Below, we examine four of the CAA 2021’s most significant changes to consumer bankruptcy laws. These changes are temporary and will sunset either on December 27, 2021, or December 27, 2022.
Section 1001 of Title X of the CAA 2021 addresses bankruptcy relief, including: a temporary revision to the definition of “property of the estate” to exclude certain federal coronavirus relief payments; temporary revisions to Section 1328 to permit a discharge notwithstanding the debtor’s failure to make all required mortgage payments under a confirmed plan; protection against discrimination in the loss mitigation process with respect to a borrower’s current or former bankruptcy status; permission to file suppl