Breaking with a Sixth Circuit decision to the contrary, in a
March 2021 decision in
Stewart v. Holland, the District
Court for the Western District of Pennsylvania held that unfair
labor claims brought by the Department of Labor against a debtor
under the Fair Labor Standards Act ( FLSA ) were not
barred by the automatic stay but could instead proceed under the police powers exception.
A debtor s bankruptcy filing triggers the automatic
stay, which immediately enjoins, among other things, the
commencement and continuation of most litigation against the
debtor.
2 The purpose of the automatic stay
is to afford the debtor breathing room either to
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In a survey of cases in federal, state and bankruptcy courts,
commercial tenants seeking to delay or excuse the payment of rent
because of pandemic-related downturns in business sometimes looked
to the equitable doctrines of frustration of purpose and
impossibility for relief. Both of these doctrines allow for the
argument that a default is excusable under circumstances that were
unforeseeable to the parties at the time of the contract s
formation. While commercial tenants sometimes use these doctrines
in tandem, they are distinguishable in their underlying aims. The
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A recent New York Times article highlights the
challenges oftentimes faced by smaller vendors in large bankruptcy
cases. The article profiles a couple, who owns a warehouse
leased to Brooks Brothers, who were left holding a $240,000 cleanup
fee bill when Brooks Brothers rejected their warehouse lease and
refused to clear the equipment and other materials being
stored. [The New York Times; April 2, 2021]
Bloomberg reports on Alpha Media s lawsuit
against the Small Business Administration based on the
administration s failure to allow for PPP loans to companies in
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This week the Small Business Administration clarified the
Paycheck Protection Program (PPP) requirement that a PPP loan
applicant not be involved in a bankruptcy at the time it applies
for a PPP loan. The United States Patent and Trademark Office
announced it will launch an award under its Patents for Humanity
Program for inventions that address the pandemic. There were no
fiscal stimulus legislative proposals of note this week.
Regulatory Developments Relating to the Pandemic
Paycheck Protection Program Application Requirement
Clarified
On April 6, the Small Business Administration updated it
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On April 6, 2021, J. Kate Stickles was sworn in as the newest
judge of the United States Bankruptcy Court for the District of
Delaware. Judge Stickles becomes the latest judge to join the
Delaware Bankruptcy Court since Judges John T. Dorsey and Karen B.
Owens were sworn onto the bench in 2019.
Judge Stickles has thirty years of experience, previously
working for Cole Schotz P.C. and Saul Ewing LLP. According to
an Announcement issued by the Delaware
Bankruptcy Court, Judge Stickles represented debtors,
creditors, official committees, examiners, post-confirmation