Analysis: Nine Bankruptcy Code Amendments Included in Consolidated Appropriations Act

Analysis: Nine Bankruptcy Code Amendments Included in Consolidated Appropriations Act

ABI Bankruptcy Brief

December 31, 2020

ABI Bankruptcy Brief

Analysis: Nine Bankruptcy Code Amendments Included in Consolidated Appropriations Act

At nearly 5,600-pages, the Consolidated Appropriations Act (CAA) that was signed into law on Dec. 27 is reportedly the longest bill ever passed by Congress, according to an analysis on In addition to funding the federal government in 2021 and providing COVID-related relief to individuals and businesses, the new law amends the Bankruptcy Code in at least nine respects. Most of the amendments sunset in either one or two years. One of the amendments will become effective only if the Small Business Administration signs off on it.

Commentary: The "New and Improved" PPP Loan Package!

By Thomas J. Salerno
Stinson LLP

On December 23, 2020, Congress passed the Combined Consolidated Appropriations Act, 2021, which includes the Coronavirus Economic Relief for Transportation Services Act and Coronavirus Response and Relief and Relief Supplemental Appropriations Act (H.R. 133) (the "CARES Act II") , which provides for another $284.45 billion in "PPP Second Draw Loans" ("PPP III Loans"). While over four months had passed since the lapse of the prior PPP loan program, struggling businesses throughout the U.S. breathed an audible sigh of relief. As CARES Act II contained numerous provisions related to stimulus and aid availability separate from PPP III Loans. Despite threats of veto, President Trump signed the bill on December 27, 2020. Did CARES Act II "fix" the issue and definitively do away with any future litigation in this area? Of course not. Instead, there is a mixed bag in CARES Act II — some good news for some debtors, bad news for other debtors, and a pretty much sure bet for future litigation concerning the latter.

New Small-Business Stimulus Plan Fails to Address Fraud Risks

The new COVID-19 relief plan for small businesses that President Trump signed this week doesn’t address some weaknesses in the original stimulus legislation that allowed companies with checkered histories to get billions of dollars in payments, the Wall Street Journal reported. The $900 billion pandemic-aid bill includes an additional $284 billion for the Paycheck Protection Program to support small businesses. In the earlier stimulus, 5.2 million small businesses borrowed $525 billion in forgivable loans. Nearly 1,500 companies that received about $2 billion in PPP loans have faced allegations of violating government regulations or of criminal conduct, according to a Wall Street Journal analysis of loan recipients and news sources. Another 432 firms laid off workers after getting approved for nearly $1 billion in loans, according to an analysis of national layoff notices filed mostly by large companies by Good Jobs First, a Washington, D.C.-based nonprofit promoting corporate and government accountability. The government has charged dozens of people in at least 36 complaints related to fraudulently obtaining coronavirus-relief funds, many for allegedly falsifying PPP loan applications and misappropriating the funds, according to a Journal review of Justice Department data. (Subscription required.).

U.S. Unemployment Claims Fell Modestly Last Week

New applications for unemployment assistance fell last week, a sign of modest improvement during a holiday period clouded with uncertainty around impending changes to benefit payments, the Wall Street Journal reported. Weekly initial claims for jobless benefits from regular state programs, a proxy for layoffs, declined by 19,000 to a seasonally adjusted 787,000 in the week ended Dec. 26, the Labor Department said Thursday. That marked a second consecutive decline from the three-month high recorded earlier in December, when virus cases were surging and more jurisdictions were bringing back economic restrictions to control the spread of the coronavirus. Last week’s level remains higher than any recorded before this year, although it is down sharply from a peak of nearly 7 million in late March. The four-week average of claims, which smooths volatile data, rose to the highest level since early October. (Subscription required.).

Pandemic Accelerated Transformation of Retail Industry in 2020

The retail industry was in the midst of a transformation before 2020. But the onset of the pandemic accelerated that change, fundamentally reordering how and where people shop, and rippling across the broader economy, the New York Times reported. Many stores closed for good, as chains cut physical locations or filed for bankruptcy, displacing everyone from highly paid executives to hourly workers. Amazon grew even more powerful and unavoidable as millions of people bought goods online during lockdowns. The divide between essential businesses allowed to stay open and nonessential ones forced to close drove shoppers to big-box chains like Walmart, Target and Dick’s and worsened struggling department stores’ woes. The apparel industry and a slew of malls were battered as millions of Americans stayed home and a litany of dress-up events, from proms to weddings, were canceled or postponed. This year’s civil unrest and its thorny issues for American society also hit retailers. Businesses closed because of protests over George Floyd’s killing by a white police officer, and they reckoned with their own failings when it came to race. The challenges faced by working parents, including the cost and availability of basic child care during the pandemic, were keenly felt by women working at stores from CVS to Bloomingdale’s. And there were questions about the treatment of workers, as retailers and their backers treated employees shoddily during bankruptcies or failed to offer hazard pay or adequate notifications about workplace COVID-19 outbreaks.

Have a Safe and Happy New Year! 

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New on ABI’s Bankruptcy Blog Exchange: How Cryptocurrency and Blockchain Made Further Inroads into Financial Services in 2020

Government officials and many bankers remain wary of digital currencies, but they'll have to learn to live with them, according to a recent blog post.

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