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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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On March 27, 2021, President Biden signed into law the COVID-19 Bankruptcy Relief Extension Act (the Extension Act). The Extension Act temporarily extends certain bankruptcy relief provisions that were enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), as further amended and/or extended as part of the Consolidated Appropriations Act (the CAA) which was signed into law on December 27, 2020. This alert highlights the impact of these changes on banks and other lenders.
SUBCHAPTER V DEBT LIMITS
Increase of Debt Limit to $7.5 million
The Small Business Reorganization Act of 2019 created Subchapter V of chapter 11 of the Bankruptcy Code, and became effective on February 19, 2020, immediately before the onset of the COVID-19 pandemic. Subchapter V was enacted to streamline the reorganization process for smaller companies with debts up to $2.7 million. The CARES Act increased the debt
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Bradley’s Bankruptcy Basics: COVID-19 Bankruptcy Relief Extension Act Extends Various CARES Act Amendments to the Bankruptcy Code Thursday, April 29, 2021
Last March, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) made several changes to the Bankruptcy Code, including those changes discussed in more detail here. As it became clear that we would be dealing with COVID-19 for much longer than previously anticipated, Congress passed the Consolidated Appropriations Act (CAA), which made additional changes to the Bankruptcy Code, including those explored in more detail in this article.
Originally, several of the Bankruptcy Code amendments included in the prior legislation were scheduled to sunset in March 2021, on the first anniversary of the CARES Act. However, on March 27, 2021, hours before the originally scheduled sunsets, the COVID-19 Bankruptcy Relief Extension Act of 2021 (Extension Act) was pa
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Last March, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) made several changes to the Bankruptcy Code, including those changes discussed in more detail here. As it became clear that we would be dealing with COVID-19 for much longer than previously anticipated, Congress passed the Consolidated Appropriations Act (CAA), which made additional changes to the Bankruptcy Code, including those explored in more detail in this article.
Originally, several of the Bankruptcy Code amendments included in the prior legislation were scheduled to sunset in March 2021, on the first anniversary of the CARES Act. However, on March 27, 2021, hours before the originally scheduled sunsets, the COVID-19 Bankruptcy Relief Extension Act of 2021 (Extension Act) was passed. While the Extension Act extended certain of the Bankruptcy Code amendments included in the CARES Act, it did not exten
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On March 27, 2020, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, providing relief to a wide array of individuals and industries. Included in the CARES Act were certain provisions related to the Bankruptcy Code. Of note, the CARES Act:
Amends Section 1182(a)(A) to increase the aggregate debt limit for small businesses filing for relief under Subchapter V of Chapter 11 to $7,500,000 from $2,725,625.
Amends the definition of “ income” in Chapters 7 and 13 of the Bankruptcy Code to exclude from monthly income payments made under Federal law relating to COVID-19 and clarifying that disposable income for Chapter 13 plans does not include those payments.