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Since the passage of the modern version of the Bankruptcy Code in 1978, chapter 11 has been used as a tool by debtors to address mass litigation liabilities. While there are certain limitations and exceptions, chapter 11 can be a preferred avenue to address mass litigation liabilities because (1) the automatic stay of § 362 of the Bankruptcy Code generally halts most pending litigation, (2) cases pending in different jurisdictions around the country potentially can be removed and consolidated in front of a single court for resolution pursuant to 28 U.S.C.
On March 29, 2021, in In re BK Technologies Inc.,[1] newly appointed Chief Bankruptcy Judge McKay Mignault dismissed the first Small Business Reorganization Act (SBRA) case filed in West Virginia due to a lack of a realistic ability to reorganize and the debtor’s bad faith. One of the key issues in the case was whether the SBRA debtor could utilize the bankruptcy process to liquidate what little it had left even after it had already been shut down for months. In dismissing the case, the court ruled that it could not.
Insolvency professionals have limited options to consider when counseling small business clients in financial distress who wish to continue operating their business. On the federal level, practitioners may choose to file a traditional chapter 11 reorganization or a small business bankruptcy under subchapter V.
It is now widely known that the novel coronavirus (COVID-19) pandemic changed society for a variety of industries, whom either have deteriorated significantly or now cease to exist. At the core of the pandemic’s repercussions are mortgage lenders and other related companies — arguably suffering some of the most significant harm among affected industries during an unprecedented period in global history. One such company is Stearns Holdings, LLC, which, along with six debtor affiliates (the debtors), filed for chapter 11 protection on July 9, 2019, in the U.S.
A local group of bankruptcy judges and insolvency professionals has published recommendations for ways that the U.S. Bankruptcy Court for the Central District of California can address obstacles for small businesses needing to file for chapter 11, including educating about the availability of subchapter V.[1] In late 2019, Chief Bankruptcy Judge Maureen A.
The new year brings several changes to bankruptcy practice through the enactment of the Consolidated Appropriations Act, 2021 (CAA), which augments the CARES Act by expanding the Paycheck Protection Program (PPP), adding stimulus programs and installing coronavirus relief valves for troubled sectors of the economy.[1] Those relief valves include temporary revisions to the Bankruptcy Code in the areas of debtor-in-possession (DIP) financing, avoidable preferences, nonresidential real property leases, mortgage-servicing, custom duties and more.
The hotel industry has suffered significantly since the outset of the COVID-19 pandemic. Occupancy rates for hotels in urban areas in August 2020 were down to 38% compared to 89% in August 2019.[1] Many hotels, particularly those in New York, were forced to furlough staff in response to local requirements and economic pressures.
