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Both franchisees and franchisors in the restaurant industry have weathered tumultuous times due to the economic consequences of COVID-19. Franchisors faced hurdles such as having to reduce or eliminate royalties for distressed franchises dealing with shutdowns or losing franchised outlets entirely. Similarly, multiunit franchisees have struggled with a drop in sales from the pandemic. Moreover, multiunit franchisees and franchisors may be beyond the reach of certain federal relief programs, like the recently enacted American Rescue Plan Act s Restaurant Revitalization Fund, which excludes entities that, as of March 3, 2020, owned or operated more than 20 locations (together with an affiliated business), regardless of whether those locations do business under the same or multiple names. As a result of ongoing challenges, an increasing number of franchisors and multiunit franchisees may seek relief under Chapter 11 pursuant
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The 2020 CARES Act, enacted in response to the COVID-19 pandemic, included what was thought to be a temporary increase in the debt limits for Subchapter V bankruptcy filings under the Small Business Reorganization Act. Specifically, the CARES Act increased the Subchapter V maximum debt limit from $2,725,625 to $7.5 million. The intent was to, essentially, allow additional small businesses with debt in excess of the previous debt limits to qualify for reorganization under the Small Business Reorganization Act. However, under the terms of the CARES Act, this temporary debt limit increase was set to expire on March 27, 2021.
Appropriately branded as the
most significant reforms
to Australia s insolvency framework in 30 years the
Corporations Amendment (Corporate Insolvency Reforms) Bill
was introduced to Parliament on 12 November 2020, following public
consultation in October 2020 and passed both houses on 10 December
2020.
The amendments to the
be effective from
implement a new
Small Business Restructuring
Process (likened to the US Chapter 11 process), by which
eligible small companies may restructure their debts with the
assistance of a Small Business Restructuring Practitioner, but
without the appointment of an external administrator or liquidator;
and
introduce a
Simplified Liquidation Process for
eligible small companies.
In a domain where the same familiar processes of administration,
Wednesday, December 23, 2020
For many, 2020 has been the year to forget. The Coronavirus pandemic (COVID-19) has halted global economies and initiated recessions across continents and countries, including Australia. In an attempt to alleviate the financial impact of COVID-19, the Australian Government has implemented various reforms (both temporary and permanent) designed to provide relief to financially distressed businesses. One sector hardest hit is that of small businesses and the Australian Government has now finalised a new restructuring process for small businesses, commencing on 1 January 2021.
Although the reforms, set out in the
Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (Act), have appeal across sectors, there are many who think that the time allowed for consultation and implementation of this new regime was insufficient for the changes to be properly assessed and considered before taking effect. This is a common theme around man
Courts could be overwhelmed by a tsunami of bankruptcy filings in the next few months
Experts say many small businesses may file for bankruptcy without more help.
and last updated 2020-12-09 21:47:41-05
PHOENIX â It s been a tough year for many small businesses. Some are hanging on by a thread with business severely impacted due to COVID-19.
Surprisingly, the number of bankruptcy filings has remained steady and even seen a small decline this year, but financial experts advise, this could just be the calm before the storm. Maybe the best way to say it is there is a tidal wave coming. The question is, are you going to be in front of that tidal wave or crushed by the tidal wave, because it is coming, said Lamar Hawkins from Guidant Law Firm.