Bankruptcy lawyers in Baltimore, Maryland and all over the US are faced with many adjustments. Due to the COVID-19 pandemic, bankruptcy law has seen a lot of changes in 2020 and 2021. But even though we see and feel the changes today, many of the other amendments were already included in the Bankruptcy Code even before the pandemic. In this blog, we will talk about some of the changes made as well as their impact on various individuals.
THE SMALL BUSINESS REORGANIZATION ACT (SBRA)
The Small Business Reorganization Act (made effective on February 19, 2020) is there to help small business debtors who have debts of no more than $2,725,625 (subject to other criteria and requirements). Under the CARES Act, the debt limit was temporarily increased to $7,500,000 and was set to expire on March 27, 2021. However, the COVID-19 Bankruptcy Relief Act of 2021 was signed into law on the same day. It means the SBRA eligibility debt limit was kept at $7,500,000 until March 27, 2022. A one-year extension was also granted for other CARES Act bankruptcy-related provisions.
This arrangement works well for borrowers and lenders since it is a faster and cheaper bankruptcy option. With the extension of the raised debt limit until March 27, 2022, it will be easier for smaller companies to reorganize, and lenders can preserve the going-concern value of their collateral. If you want more information on this, ask your Bankruptcy lawyer in Baltimore, Maryland.
THE CONSOLIDATED APPROPRIATIONS ACT, 2021 (CAA)
The Consolidated Appropriations Act of 2021 contains more bankruptcy law changes which were enacted at the end of last year. Typically, debtors need to perform their obligations under unexpired non-residential leases, and it is normally done by paying post-petition rent. If necessary, a bankruptcy court can grant an additional 60 days of extra time from the commencement of the case so they can pay the rent due for the first 60 days after the petition date. But under the CAA, SBRA debtors are allowed to ask for up to 60 additional days on top of their extension if they have COVID-related hardships. For tenants, the previous time limit of 120 days for deciding whether to accept or reject a non-residential lease was increased to 210 days. These are set to expire on December 27, 2022.
FILING PROOFS OF CLAIM IN BANKRUPTCY
Under the CAA, sections 501 and 502 of the Bankruptcy Code were amended. They enacted a temporary provision that allows certain eligible lenders to file an additional proof of claim for any amount that has accrued under any forbearance agreement that has been entered into between debtors and lenders under the CARES Act.
This modification is intended to compensate lenders who have incurred damages due to the implementation of the CARES Act and is set to expire on March 27, 2022.
The changes made to the Bankruptcy Code are designed to help businesses and individuals recover from financial problems caused by COVID-19. So if you are faced with the difficult decision of filing for bankruptcy, choose Richard Hackerman today. He is a renowned and experienced Baltimore-based bankruptcy lawyer, and he is here to help. Contact us today.