Category Archives: Bankruptcy

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As per their bankruptcy questionnaire which surveyed over 17,000 Americans in the last year, financial start-up Upsolve found that Black women filed for personal bankruptcies due to the COVID-19 pandemic at a far more distressing rate when in comparison to Black men, white women, and white men.

Essentially, theres a link between the disproportionate job/wage loss Black women faced in 2020 and the groups increased number of citing the pandemic as their reason for filing bankruptcy which has more than doubled within less than the past year. According to Upsolves data, in April 2020, 20.8% of Black women cited the pandemic as the reason for their filing whereas in January 2021, 49.4% did. In comparison, 21.4% of white women cited the pandemic as their reason for filing in April of last year and 34.2% of them did this past January.

Black women fared the worst when compared to other Upsolve users, the nonprofit additionally gathered. Black women were more likely to cite a loss of wages as a reason for their bankruptcy than their male counterparts. On average each month women accounted for 70% of Black Upsolve users citing a loss of wages as a reason for their bankruptcy. In August 2020, that number peaked as Black women comprised 76.3% of Black folks who cited a loss of wages as their motivation for filing for bankruptcy.

Additionally, the report noted that based on their pool of surveyed users, Black communities in general are suffering from high levels of financial distress. As they highlighted, racist policies have made it virtually impossible for Black families to create and build generational wealth such as acquiring assets, and rent is higher for Black Upsolvers in 27 of 42 states. When it comes to work statistics, Black women in particular have suffered wage loss rates at an exponential degree as previously mentioned, but according to Upsolves report, 80% of Black workers hold a position that doesnt allow remote work. The latter was an important mention since Black communities have been disproportionately impacted by COVID-19 and subsequently, many are now facing medical bills and debt that only further their financial issues because they have to work outside the home and have been at a higher risk of getting exposed.

While Upsolve can be useful to low-income Americans in financial distress [who want to] access Chapter 7 bankruptcy even if they cant afford to hire a lawyer, if you are considering filing for the protection, keep in mind that the relief the filing can provide is only available every eight years. While systematic and societal changes need to be made in order to help Black women and communities achieve higher levels of financial freedom and success, doing things like lowering your mortgage, being prepared for financial windfall, and getting vaccinated to avoid COVID-19 related medical expenses are all individual things one might consider to as potential ways of lessening their financial burden.

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Black Women Having Been Filing For Bankruptcy At Distressing Rates Since Last Year Heres Why - MadameNoire

In the face of increased tenant bankruptcies caused by the COVID-19 pandemic, a key question arises for commercial landlords: what protection do I have from the security provided by my tenant? Tenant-supplied security under a lease can take many forms, including a third party guarantee or indemnity, prepaid rent, a cash deposit, and a letter of credit (an LOC). Crucially, certain forms of security will be more beneficial to a landlord in the face of a tenant bankruptcy, especially where the lease has been disclaimed by the tenants trustee in bankruptcy.

What you need to know

Bankruptcy & landlord relief

For a landlord, the primary benefit of an LOC surrounds how this form of security is applied in the face of a bankrupt commercial tenant. Funds previously delivered by a bankrupt tenant as a cash security deposit automatically fall into the pool of property to be distributed amongst the bankrupt tenants creditors.1 This may also be the case for prepaid rent, depending on the wording of the lease.2 Additionally, though a guarantee or an indemnity may survive a tenants bankruptcy and lease disclaimer,3 each is only as good as the financial covenant of the party guaranteeing or indemnifying, and that covenant may have changed since the guarantee or indemnity was first provided.

Canadas Bankruptcy and Insolvency Act (the BIA) and Ontarios Commercial Tenancies Act (the CTA) provide certain statutory limits on the preferred (albeit unsecured) claim a landlord has over a bankrupt tenants property, being up to three months of rental arrears, and three months of accelerated rent (providing the lease grants the latter right) (the Preferential Claim).4 Depending on the extent of the bankrupt tenants liabilities and the creditors who rank in priority to the landlord in priority, the landlord may recover little if anything.

It is in this context of legislative creditor hierarchy that the benefits of an LOC, particularly an irrevocable standby LOC, generally outweigh other forms of security.

Common law approach in a commercial leasing context

While jurisprudence has generally held that a landlord is able to receive payment under an LOC without having to compete with the bankrupt tenants other creditors, there is some uncertainty with respect to the extent of an LOCs autonomy, and the amount a landlord would be permitted to draw down where a lease has been disclaimed in bankruptcy.

Historically, the courts have taken two distinct approaches to what effect bankruptcy can have on a landlords ability to benefit from a third partys contractual obligation to make payment relating to a tenants obligations under a lease (e.g., a guarantor, or a third party Issuer). First, a number of decisions following the decision of Cummer-Yonge Investments Ltd. v. Fagot et al. held that, a bankrupt tenants obligations under a lease came to an end once the lease was disclaimed, such that a landlords recovery under a LOC with a third party Issuer was limited to its Preferential Claim.5 Other courts took an alternative approach to the question, following the obiter dicta of the Supreme Court of Canada in Crystalline Investments Ltd. v. Domgroup Ltd., in which the Court held that a third partys obligation to make payment could continue despite the lease being disclaimed, with the result that a landlords draw on an LOC was not necessarily limited to its Preferential Claim.6 While neither Cummer-Yonge nor Crystalline expressly dealt with LOCs, the legal community and subsequent case law applied the principles relating to third party payment obligations and disclaimers to LOCs held as security for commercial lease obligations.

The uncertainty of the extent of a landlords entitlement to draw on an LOC came to a head in 2019 with the Ontario Superior Court decision of 7636156 Canada Inc. v. OMERS Realty Corporation (OMERS).The Court held that the banks obligation to make payment to the landlord under an LOC was wholly dependent on the continued existence of the bankrupt tenants obligations to the landlord under the lease. The Court held that since the tenants trustees disclaimer of the lease extinguishes a bankrupt tenants continued obligations under the lease, the landlords entitlement to recovery under the LOC was limited to the Preferential Claim.7 After being appealed, the Ontario Court of Appeal recently released its decision on OMERS,8 which provides much needed clarity on the extent to which a commercial landlord can draw on an LOC, holding that there is no provision within the BIA, nor principle of bankruptcy law, that overrides the autonomy principle, and barring the existence of an exception to the principle of autonomy, that the landlord was entitled to draw on the full amount of the LOC.9

Recognizing the varied case law that preceded OMERS, the Court engaged in a thorough analysis of the jurisprudence. The Court addressed the different approaches taken at length, ultimately refusing the trustees argument that the principles of insolvency law automatically override the autonomy of LOCs as a result of a trustees disclaimer of a lease, such that a landlord is only entitled to draw on an LOC up to the amount of the Preferential Claim.10 The Court then reiterated the autonomy principle applicable to standby LOCs, being that the obligation of the Issuer to a beneficiary of an LOC must at all times be independent of the actual performance of the underlying contract (i.e., the lease)11. The Court noted that such autonomy of LOCs is essential for their commercial risk-minimization function,12 and proceeded to consider a possible exception to the principal of autonomy, being where the beneficiarys request for a draw is fraudulent.

The Court proceeded to look to the language of the lease and the LOC, both of which contemplated the LOC continuing to stand in the event of bankruptcy and disclaimer, significant factors in the Courts conclusion that the landlords draw on the LOC was not subject to the fraud exception to the autonomy principle13. However, an in-depth discussion of this exception to the autonomy principle is outside of the scope of this article. While the Court has provided guidance on how a tenants bankruptcy impacts a landlords ability to draw on a LOC, ultimately, whether the landlord is entitled to draw on an LOC and the amount of same involves a fact-based analysis, taking into account the language of the lease and of the LOC, as well as the circumstances surrounding the draw.

Notice of intention to make a proposal under the BIA

LOCs should also be considered within the context of a tenant that has filed a Notice of Intention to Make a Proposal under the BIA (a NOI).

Once a commercial tenant files an NOI, the tenant has the right to benefit from:

During the stay, the BIA requires the tenant to prepare and file a formal proposal with its creditors. While bankruptcy can be avoided if the tenant is successful in filing its proposal, and having its creditors approve same, if the tenant fails to file the proposal before the end of the stay, or if the creditors do not approve the proposal, the tenant is automatically deemed bankrupt.

Importantly, creditors, including landlords, may be entitled to challenge the stay. Section 69.4 of the BIA allows a creditor to request relief from the stay by providing evidence to the court demonstrating that the continued operation of the stay is likely to materially prejudice the creditor, or that there are other equitable grounds on which the Court should relieve the creditor from the stay.17 Similarly, Section 50.4(11) of the BIA allows a landlord (as a creditor) to seek a declaration for the earlier termination of the 30 day period for filing a proposal or any extension previously granted by the court, upon satisfying the court that:

A recent decision of the Alberta Queens Bench considered whether a landlords demand for payment under an LOC may not fall within the scope of proceedings that are subject to the stay granted under Section 69.1 of the BIA. In Tri-State Signature Homes Ltd, Re the Court held that drawing down on an LOC is outside of the scope of the actions prohibited by a stay, on the basis that a landlords demand for payment under an LOC relates to an obligation owed by the Issuer to the landlord, rather than an obligation of the tenant.18

Court ordered stays under the CCAA

In addition to NOIs under the BIA, it is necessary to consider the impact on an LOC where a tenant applies for, and the Court subsequently issues, an order under Section 11 of the Companies' Creditors Arrangement Act (the CCAA). While the process of restructuring under the BIA is relatively regimented, the CCAA is more flexible and allows the courts significant discretion in making orders that are appropriate in the circumstances to advance the restructuring.

That said, the CCAA also involves a stay of proceedings which restricts creditors from taking steps against the company or its assets, or from terminating contracts with the company (including based on insolvency clauses). One notable difference is how the CCAA deals with LOCs. Section 11.04 of the CCAA contains language clarifying that no order for a stay granted under Section 11.01 has an affect on any action, suit or proceeding against a person, other than the company in respect of whom the order is made, who is obligated under a letter of credit or guarantee in relation to the company.19 As such, except for exceptional circumstances in which the Court exercises its inherent jurisdiction, drawing down on an LOC issued by a third party Issuer to a landlord would not fall within the scope of the activities prohibited by a stay granted under the CCAA.20 Importantly, there is no equivalent to Section 11.04 within the BIA.

Final thoughts

When entering into a lease, a landlord should consider which form of security best meets its specific needs. If it is an LOC, special attention must be paid to, , the form, terms and conditions as well the creditworthiness of the Issuer, among other things. Where a landlord will prefer an irrevocable standby LOC, a tenant may prefer a conditional revocable LOC. There may be limitations on the amount a landlord is permitted to draw upon, and the timing for same, depending on the facts at hand. This includes whether the LOC is worded such that it intended to provide security for rental arrears or for all of a tenants obligations, whether it is to continue to apply in the event the tenant files for bankruptcy or if the lease has been disclaimed, whether there is a stay of proceedings, and if fraud is suspected.

Any entity (including landlords) considering accepting an LOC as security, or holding an existing LOC as security for another entitys performance under an agreement should carefully consider the optimum time to draw down on that security, especially if there have been one or more defaults under the agreement in question, and the likelihood of future defaults. With the unprecedented economic uncertainty caused by the COVID-19 shutdowns, it remains to be seen whether the courts will distinguish the current law even further, in an effort to provide recourse to the aggrieved party.

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Tenant bankruptcies in the COVID-19 era: tenant bankruptcy and letters of credit - Lexology

A common misconception recently is that bankruptcy filings are at an all-time high. Its an understandable assumption when the news is saturated with stories about store closures and unemployment spawned by the COVID pandemic. Yet the truth is most areas of the country are not seeing a huge spike in bankruptcy cases, and few common reasons stand out.

Bankruptcy is designed to offer individuals and businesses a fresh start on their economic journey. It often makes sense to file a bankruptcy petition when a debtor has equity in assets that a bankruptcy filing will help them retain or the debtor has a reasonable belief that their economic situation will improve if they can discharge or restructure payments on their existing debts. But what if neither of these factors are in play so bankruptcy offers no more than a false start?

Although real estate values may be increasing in some cities, many prospective individual and business bankruptcy debtors who dont own real estate have depleted their cash and other assets in an effort to make ends meet during the pandemic. If a debtor is judgment proof because they dont own assets with enough value that a creditor could legally seize them and have them sold for a price that, after costs, would substantially reduce the debt, then theres little motivation to use bankruptcy to discharge the debt. The debtor might be better off waiting to file when the debtor has assets worth protecting. Besides, the statute of limitations for collecting on a debt may expire after a few years and bar collection even without a bankruptcy discharge.

The motivation to file for bankruptcy also declines when the prospects for future economic recovery are dim. For example, if a restaurant or small retail shop barely has enough ongoing business to stay afloat and has no reasonable assurance that matters will improve in the near term, then no amount of debt reduction or delayed payments will solve the problem of a vanishing income stream. Bankruptcy doesnt revive a business thats dead on arrival. The large department store chains weve seen in the news because of their Chapter 11 filings usually come to court prepared to show they have reasonable expectations of returning to profitability by using the bankruptcy process to downsize operations, shed unsecured debt and ease repayment terms on secured debt.

Lastly, its likely that many bankruptcy filings have just been delayed. Its been common during the pandemic for creditors who havent been paid as agreed to wait to start the collection process. Some creditors have delayed collection voluntarily, while others are subject to legal restrictions like foreclosure and eviction moratoriums. Even debtors who have assets worth protecting and businesses on the rebound may choose not to file a bankruptcy petition unless and until the collector is at the door. As the health crisis recedes, collection activity will resume, and an increase in bankruptcy filings is inevitable at that point.

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What's the Deal? Bankruptcy Tips and News | Nexsen Pruet, PLLC - JDSupra - JD Supra

Earlier this week, Purdue Pharma filed a bankruptcy plan that would have some members of the Sackler family, which owns the drug company, relinquish control and pay nearly $4.3 billion to reimburse states, cities, and tribes for the costs associated with the long-running opioid crisis in the U.S. The plan is designed to end nearly 3,000 lawsuits that blamed Purdue for helping to spark a wave of prescription abuse, addictions, and deaths over the past two decades.

As part of the proposal, a new private company with an independent board selected by state and local governments will focus on developing and distributing medicines to address opioid use disorder and overdoses. But approval by creditors is uncertain. Attorneys general from nearly two dozen states, who have fought the company in bankruptcy, criticized the deal.

We spoke with Charlotte Bismuth, a former Manhattan assistant district attorney who recently published a book called Bad Medicine (about a doctor she prosecuted for dealing drugs), calls the bankruptcy plan a heist. And as a member of an opioid advocacy group, she regularly studies court documents concerning Purdue and the Sacklers. This is an edited version of our conversation.

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So in a recent article you wrote about the Purdue bankruptcy plan, which is enormously complicated, you call it a heist. Why?

One of the things I think about is how legal advocacy and how the legal system is being used. What Im trying to say is that this is not a haphazard event. Its a long and strategic plan done for a purpose and these documents are not neutral blueprints. Theyre advocacy documents.

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What do you mean by that?

Theyre advancing an agenda and a set of interests.

Dont they all?

Absolutely, but the difference here is this particular bankruptcy connects to a social crisis in the U.S. that has been going on for two decades and is of massive public interest. And this bankruptcy is substituting for a judicial process that would otherwise provide victims of the opioid epidemic with the judicial relief they have been seeking.

How is it substituting?

I wrote a book about a doctor who sold controlled substances for cash. And as I wrote about the case, I tried to understand where in the legal system were there other cases about the opioid epidemic. And what I learned was rather than having the cases against Purdue remain in a federal court (where thousands of cases around the country were consolidated), Purdue went to bankruptcy court, but was not insolvent. Why? The company pursued a settlement that would result in full civil immunity for its owners, which is pretty extraordinary on a couple of levels, because the owners are believed to be the ones who masterminded the marketing campaign for OxyContin (Purdues opioid painkiller).

My fundamental question was if they go into bankruptcy, will the victims ever have an opportunity to learn the truth about the companys operations? And two, will the public itself have any transparency into the decisions that led to the opioid epidemic? Will victims have their day in court?

I consulted a number of bankruptcy professors and learned that there were mechanisms designed in cases like these with a question of social importance to provide answer to the public. Specifically, a bankruptcy examiner would be appointed, like in the Enron case, who can conduct an independent investigations and publish a public report.

And that hasnt happened here.

No, and we see the consequences. Not only would the victims never have their day in court, many did not have visibility into the bankruptcy proceedings and were not aware of the stakes for themselves and their families. The court docket is public but very complicated and its hard to make sense of the documents, the different motions and how it all fits together. And many people did not know they could file personal injury claims against Purdue and receive compensation for the harm they suffered.

There were many lawsuits filed and theyre among the more than 2,000 filed in federal court. But the result of the bankruptcy filing was to freeze all of those lawsuits and ultimately wrap them up in the bankruptcy settlement, which is part of the plan. The other part of the plan is to release members of the Sackler family and Purdue, so they would never have to answer to those lawsuits. The bankruptcy and personal injury claims process was their last chance, and many people were not aware of that.

How do you know that?

The number of personal injury claims filed was disproportionately low. From looking at the available statistics, there were far fewer claims than would we expect, given the number of people who sought recovery treatment or died of overdoses as a result of OxyContin and other prescription opioids. My effort to understand and write about this issue started as a public education campaign.

But why call it a heist?

I believe the public is being deceived in a number of ways. I want to challenge the perception this is business as usual and a victory when, in fact, not only is it a loss, but I believe its a misstep by the bankruptcy court. There was no examiner appointed, even though, according to an expert I consulted, that was the necessary mechanism in this case to better understand what occurred. The creditors are being asked to vote on the plan without disclosure of key elements. And there are fundamental conflicts of interest.

Which key elements? Can you give us a pertinent example?

The major gap in the disclosure statement (filed as part of the bankruptcy reorganization plan) is the release to be granted to the Sacklers. They will have immunity from civil lawsuits. Thats important to understand because the Sacklers are contributing an amount of money into the settlement ($4.275 billion) and in exchange, they are getting something of great value, which is never again will they have to face any lawsuits concerning any of the activities or decisions that are believed to have sparked the opioid epidemic.

But $4.275 billion is a lot of money.

What theyre giving up actually represents a fraction of their wealth and much less than what was withdrawn from the company before filing for bankruptcy. And its a fraction of the amount of money that was generated by selling OxyContin by a company that lied about the risks of addiction. Yes, its an absolutely significant amount of money and theres value to closure. However, the immunity theyre seeking is worth much more than what theyre giving. And the amount reserved for personal injury victims between $700 million and $750 million results in payouts that are absolutely inappropriate, given the extent of the harm suffered.

How so?

The money will be divided among 137,000 personal injury claims, but they will filter down to what are called allowed claims. People will be asked for proof they took (the medicine) and suffered harm. Then attorney fees to be taken out. The payout range set forth by the plan sets a maximum payout of $48,000, and that will be for cases where an individual was prescribed OxyContin and died as a direct result. In other cases, the payout is $3,500 to $31,000. If you think about those numbers relative to the cost of funerals, a lifetime worth of lost wages, emotional suffering, the disruption to families, its paltry.

Massachusetts Attorney General Maura Healey criticized the plan, in part, because the family payout will be spread out over nine years. Why does this matter?

I think shes right. Spreading it out over nine years makes no sense other than to minimize the hit to the Sacklers wealth and its more convenient for them because they have more time to pay. Theres also mention that they have seven years to continue operating other companies they own until they sell those companies, and so they may still also retain a portion of revenues generated. The Sacklers will be paying off part of the settlement from proceeds from the sale of OxyContin made through those other companies. And theyll continue to accumulate wealth from interest rather than pay in one go. I wholeheartedly agree that there doesnt seem to be any justification for it.

Youve mentioned transparency is another issue.

Yes, the public is being denied the truth to which there is infinite value in this case, because another element not clarified or disclosed is a document repository. This is supposed to be created as part of the (reorganization) plan. But theres a short sentence at the very end of the appendix that says the scope of the repository has not yet been determined.

You started to say there was a conflict of interest. Can you explain that?

There is some background here. In 2018, several parties members of the Sackler family and Purdue Pharma entered in a memorandum of understanding. The purpose was to recognize they had certain interests in common and could benefit by sharing documents and information. They wanted to be able to share documents to mount a defense without opening themselves up to public disclosure. But the agreement says they cant share without getting permission from the rest of the group. And if any material is requested by an outside party, all others have to be informed.

Purdue hired Davis Polk [a law firm] as its representative in the bankruptcy. And Purdue has a duty to make sure all of its assets are preserved for creditors. One of Davis Polks assignments in the bankruptcy was to make sure there is no fraud or mismanagement that diminished the estate for the creditors. So the firm had to conduct an investigation of some of the Sackler family members. [See page 75]. You would want Davis Polk to have unfettered access to company documents, but also be able to request documents from the Sacklers and be able to share documents with others in the bankruptcy. The problem created by the agreement was that information could be shared without everyones full agreement. So what is extremely hard to understand is how can attorneys for Purdue can represent to the public they were able to conduct a full and unbiased investigation of a party with whom their client has an agreement to restrict use of documents?

Thats part of the heist. Its a request to the public for unlimited confidence in this process and the plan that is not only incomplete in its disclosures, but works against public transparency and results in dramatically insufficient compensation for victims of Purdue Pharma.

So in other words, you think the deck is stacked.

Do I believe the deck is stacked? Yes. One branch of the Sackler family is represented by represented by Mary Jo White, a former U.S. Attorney who has extraordinary access to the Department of Justice. Theres no question the Sacklers benefited from more attention and consideration than any other players in the opioid epidemic. No one else has access to this level of advocacy, because its extremely expensive to spend all the hours necessary to generate the materials and information for the presentations before the federal prosecutors and the attorney for Purdue.

They also went forum shopping for a judge The company leased property in the jurisdiction where (U.S. Bankruptcy Court Judge Robert Drain) is located to make sure the case would end up in front of him. The issue is third party release. The Sacklers are not debtors in the bankruptcy case. Purdue is the debtor, but they will benefit from civil immunity. Within the network of bankruptcy courts across the U.S., there is no consensus on whether this is appropriate, but Drain is one of few judges who has considered and granted such releases. And that release is the single most valuable element the Sacklers are seeking. This release minimizes the impact on their wealth.

This is a process that preserves most of their wealth. It appears to be a system designed to protect the creditors, but its not. This is about bias in the system.

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'The public is being denied the truth': Legal expert blasts Purdue bankruptcy plan - STAT

As we cross the one-year anniversary of the COVID-19 pandemic, we reflect on the multiple amendments to the Bankruptcy Code that have been implemented to help curb the effects of various economic shutdowns and financial hardships caused by the coronavirus. These Bankruptcy Code amendments are only temporary, but Congress is considering extending them to facilitate the continued recovery from the COVID-19 pandemic. Below are five significant, though temporary, amendments to the Bankruptcy Code resulting from the COVID-19 pandemic.

Under the Small Business Reorganization Act of 2019 (SBRA), which took effect in February 2020 (just before the COVID-19 pandemic began), only small businesses with secured and unsecured debts less than or equal to $2,725,625 qualified to be Subchapter V debtors. Businesses with debts in excess of the $2,725,625 debt limit would be required to seek relief under regular Chapter 11 or liquidate under Chapter 7. However, a month after the SBRA became effective, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law and increased the SBRAs debt limit to $7.5 million. As such, under the CARES Act, small business debtors with debts $7.5 million or less qualify for bankruptcy relief under Subchapter V.

The CARES Act also amended the Bankruptcy Codes definition of current monthly income to exclude payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act with respect to the coronavirus disease 2019 (COVID-19). The concept of current monthly income is used in the Chapter 7 means test to determine whether a debtor is eligible for a Chapter 7 discharge or instead receives sufficient income to repay some or all of his debts through a Chapter 13 or Chapter 11 plan. Additionally, current monthly income is the amount a Chapter 13 debtor must pay unsecured creditors through a Chapter 13 plan if an unsecured creditor or the Chapter 13 trustee objects to his plan. It is also the amount that an individual Chapter 11 debtor must pay in his Chapter 11 plan. This CARES Act amendment allows debtors to exempt income related to COVID-19 from the calculation of their current monthly income. On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA 2021), which expanded the protection of coronavirus relief payments by explicitly excluding them from the property of the bankruptcy estate. This ensures that consumers will not need to utilize an exemption to retain the relief payments.

The CARES Act further amended the Bankruptcy Code to allow pre-COVID-19 Chapter 13 plans to be modified to account for a debtors financial hardships resulting from the pandemic. Additionally, under the CARES Act, Chapter 13 plans that were confirmed prior to the COVID-19 pandemic can be extended from the prior maximum plan period of five years to a period of seven years, resulting in the reduction of debtors monthly plan payment amounts.

Recently, the Bankruptcy Court for the Middle District of Alabama allowed two debtors whose Chapter 13 plans were confirmed prior to March 2020 to modify their plans based on COVID-19 hardships. Although one of the debtors hardships was only indirectly caused by COVID-19, the debtor was nonetheless permitted to modify her plan pursuant to the CARES Act. Additionally, the Bankruptcy Court allowed the plan modifications despite any pre-pandemic defaults on plan payments. A closer look at these decisions is available here.

Under the CAA 2021, Chapter 13 debtors who have defaulted on up to three monthly residential mortgage payments during the pandemic as a result of COVID-19 may, upon notice and a hearing, receive a Chapter 13 discharge. Additionally, the CAA 2021 provides that debtors who include residential property in a cure and maintain plan and enter into a qualifying loan modification or forbearance may also receive a Chapter 13 discharge.

The CAA 2021 further amended the Bankruptcy Code to allow mortgage servicers to file supplemental proofs of claim for claims that are forborne, deferred, or otherwise modified under the CARES Act, even after the claims bar date has passed. Similarly, mortgage servicers and other parties in interest can move to modify a Chapter 13 plan to allow for payment of such supplemental proofs of claim before the plan period ends and the Chapter 13 case is closed.

A more detailed analysis of the CARES Acts impact on the Bankruptcy Code can be found here, and more information regarding the CAA 2021s changes to the Bankruptcy Code can be found here. Although these amendments to the Bankruptcy Code are only temporary and scheduled to sunset in 2021 and 2022, Congress is currently considering extending this relief as the COVID-19 pandemic continues.

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Bradleys Bankruptcy Basics: 5 Significant (if Temporary) Amendments to the Bankruptcy Code Resulting from the COVID-19 Pandemic - JD Supra

Congress passed new, temporary bankruptcy relief measures late last year that impact certain commercial landlords and tenants. Among other things, the new legislation, which was signed into law on Dec. 27, 2020: 1) extends commercial rent forbearance for certain small business tenants experiencing material financial hardship related to the COVID-19 pandemic, 2) lengthens the time period for commercial tenants to assume or reject a commercial lease, and 3) establishes protections for certain commercial deferred rental payment agreements.

Description of Change: In general, a commercial tenant in bankruptcy must pay its rental obligations as they become due commencing on the date the tenant files for bankruptcy and continuing through such time that the tenant accepts or rejects the lease. The new law permits a commercial tenant experiencing "material financial hardship" due directly or indirectly to COVID-19 to forbear its obligations to pay rent until the earlier of 1) 60 days after the date of the order for relief under the Bankruptcy Code, a period that may be extended for an additional period of 60 days if the bankruptcy court determines that the commercial tenant is continuing to experience such material financial hardship, or 2) the date that the lease is assumed or rejected. Of note, "Material Financial Hardship" is not defined.

Applicability: The new changes to the bankruptcy code are limited to cases involving "small business debtors" under Subchapter V of Chapter 11 of the Bankruptcy Code, which is restricted to commercial debtors having noncontingent, liquidated debts under $7.5 million.

Sunset of Bankruptcy Relief: Dec. 27, 2022.

Effect: This change will afford a tenant who successfully demonstrates to a bankruptcy court that it has experienced a "material financial hardship" due to COVID-19 to forbear its obligation to pay rent under its lease for a longer time than was initially permitted by the bankruptcy code.

Description of Change: The new law extends the initial time period for a commercial tenant to assume or reject a lease from 120 days to 210 days. The prior provisions that provide that the bankruptcy court may order further extensions of this time period have not been changed, with the effect that there is an increase of 90 days within which such a lease may be assumed or rejected.

Applicability: Any Chapter 11 debtor.

Sunset of Bankruptcy Relief: Dec. 27, 2022.

Effect: The extension of time to assume or reject a lease will have the effect of giving commercial landlords and tenants more time to discuss whether the lease should be assumed or rejected. Of note, this extension applies to all debtors, not simply those that are experiencing financial hardship due to COVID-19.

Description of Change: Under bankruptcy law, certain payments made by a tenant to its landlord within 90 days of the bankruptcy filing are subject to being clawed back into the bankruptcy estate as "preferential payments." Under the new law, a commercial tenant in bankruptcy who makes a "covered rental arrearages" payment will be excluded from preferential treatment in certain situations. A "covered rental arrearages" payment is a rental payment that has been deferred or postponed under a commercial lease based on an amendment to such lease after March 13, 2020.

Applicability: Any Chapter 11 debtor.

Sunset of Bankruptcy Relief: Dec. 27, 2022.

Effect: This change will protect commercial landlords from having deferred rent payments being clawed back into the bankruptcy estate and thereby will encourage commercial landlords and tenants to negotiate rent deferment arrangements to mitigate the impacts of the COVID-19 pandemic.

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Congress Enacts Temporary Bankruptcy Relief Related to COVID-19 - JD Supra

Neiman Marcus Holding Company Inc. launched a junk-bond sale Thursday to refinance debt taken out to emerge from bankruptcy, marking the retailers return to the capital markets just six months after exiting from Chapter 11.

The troubled upscale department store is marketing a $1 billion five-year first-lien bond. Pricing is expected on Friday.

Proceeds will pay down the $125 million first-in, last-out facility and repay the roughly $748 million exit term loan and notes due in 2025, resulting in a modest reduction in interest expenses, according to a report Thursday morning by S&P Global Ratings.

Early pricing discussions are for a yield in the mid-to-high 7% range.

S&P rated the new notes and company CCC+, seven steps into junk. We continue to view Neimans capital structure as unsustainable based on our expectation for pressured performance through fiscal 2021, the S&P analysts wrote.

The COVID-19 pandemic shut down Neimans stores and caused an already precarious financial situation to tip it into bankruptcy. The Dallas-based company emerged from Chapter 11 in September under control of creditors Pacific Investment Management Co., Davidson Kempner Capital Management and Sixth Street Partners.

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Originally posted here:

Neiman taps junk-bond market to refinance its bankruptcy exit debt - The Dallas Morning News

The Covid-19 pandemic caused millions of people to lose their jobs; it took the lives of more than 534,000 Americans; and it has left countless, indelible marks on the world. But in the past year, there has not been a coinciding rise in bankruptcy filings in Arizona.

All bankruptcy filings in the United States Bankruptcy Court in the District of Arizona fell by 20.6% from 2019 to 2020, according to court records.

In Phoenix, Chapter 11 filings spiked in June but dropped by 13.4% annually, from 97 in 2019 to 84 in 2020.

In the first months of 2021, all types of filings continue to decline both in Phoenix and across the state. But experts suspect there is a wave of bankruptcies on the horizon, potentially dampening hopes of a full post-pandemic recovery.

Read more from the Phoenix Business Journal.

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Pandemic measures have prevented bankruptcy filings in Arizona, but a flood may be on the horizon - ABC15 Arizona

The company announced today it's working toward an October 2021 grand opening forDeBartolo Commons an outdoor athletic and entertainment green space and event venue.

BOARDMAN Southern Park Mall owner Washington Prime Group said in a statement today that it still plans to follow through with its $30 million redevelopment of the Boardman mall, despite news of the company's potential bankruptcy.

Washington Prime Group told investors Tuesday its management has "substantial doubt" over whether the company can continue.

The company has engaged advisors to help negotiate with some of its corporate debt holders. During that process, "the company expects business as usual at Southern Park Mall.

"The company remains committed to executing a first-class redevelopment project, which will feature the DeBartolo Commons athletic and entertainment green space and event venue for the benefit of Southern Park Malls guests, tenants, and community neighbors and partners," according to the statement.

Programming details will be announced "closer to October."

A Planet Fitness location will open this spring, and afull interior mall "refresh" is expected to start January 2022.

The company has previously announced new upcoming local tenants: Bogey's and Steel Valley Brew Works. It's also working to secure another local tenant for the final space adjacent to the redevelopment.

According to the company, it still plans to invest $30 million into the site; $9 million has already been invested.

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Bankruptcy looms, but Southern Park Mall owner expects 'business as usual' - Mahoning Matters

Antibioticbiotechs often struggle to turn their products into commercial triumphs, and that's certainly beenthe case for New Haven, Connecticut-based Melinta Therapeutics, which ultimately filed for bankruptcy in late 2019. ButMelinta hopesits newly minteddrug can become an exception, thanks toa convenience edge over rivals.

The FDA approved Melintas Kimyrsa, also known asoritavancin, to treat adults with acute bacterial skin and skin structure infections caused by designated Gram-positive microorganisms, such as methicillin-resistant Staphylococcus aureus. With its sights set on a summer launch, Melinta aims to provide a one-and-done alternative to the current multidose standard for treatment, the company said in a release.

The drug is a next-gen version of Melinta's Orbactiv antibiotic and has been tested both head-to-head against the commonly used antibiotic vancomycin and alongside its predecessor.A long-actinglipoglycopeptide antibioticKimyrsa isgiven as a one-hour, 1,200-mg infusion, potentially offeringclinicians flexibility to treat patients outside the hospital, Melinta said.

RELATED:GlaxoSmithKline to shut down antibiotics production, cut 300 jobs in wake of Novartis buyout

That consideration could be especially beneficial to patients struggling to meetinfusion schedules amid COVID-19, which has shut down or changed operations at clinics nationwide.

Bacterial skin infectionshitsome 14 million patients in the U.S. each year, Meltina says. The infections cause more than 3 million visits to the emergency room annually and are the 8th most common cause of ER admissions. Admitted patients typically remain hospitalized for around 4.1 days, costingU.S. facilities$4 billion each year, the company addeda burden it aims to reduce thanks to Kimyrsa's abbreviated infusion time and volume.

Regulators cleared the drug based on results from an open-label pharmacokinetics study that compared an hour-long Kimyrsa infusion with a three-hour Orbactiv infusion.

Kimyrsa also passed muster in thephase 3 Solo study, which also assessed Orbactiv. In that trial, researchers pitted a single, 1,200mg intravenous dose of Kimyrsa against twice-daily vancomycin in 1,987 adults, including a subset of 405 patients with methicillin-resistant Staphylococcus aureus infection, which can be tricky to treat. A singleKimyrsa dose was as effective as 7-10 days of twice-daily vancomycin at 15mg/kg, Melinta said.

RELATED:Novartis' Sandoz doubles down on antibiotics with $500M deal for GSK brands

The approval could give a much-needed boost to Melinta, which filed for bankruptcy in 2019 after months of mounting financial tensions, thoughturning an antibiotic into a cash boon is almost always a tricky prospect.

Last February, a U.S. bankruptcy court gavegroups interested in buying the biotechuntil March 2 to make an offer, withDeerfield Management thenin the pole position to snap upMelinta as payment for a $140 million loan it extended during the company's originalfiling.

Melinta made another bid to right its financials in June when it revealed it had won a bidding war withAcelRx Pharmaceuticals to buy upTetraphase Pharmaceuticals.Tetraphase won FDA approval for the antibiotic Xerava in patients with complicated intra-abdominal infections in 2018, butlike other antibiotic biotechs, it has struggled to turn Xerava into a commercial success.

By June 24, however, the deal entered the rearviewafter Tetraphase received a "superior offer" from La Jolla Pharmaceutical for$43.0 millionin cash, plus an additional$16.0 millionpotentially payable under contingent value rights.

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Melinta, bouncing back from bankruptcy, lands FDA approval for speedy skin infection fighter - FiercePharma