Senate Passes Amended Version of "COVID-19 Bankruptcy Relief Extension Act of 2021" Ahead of March 27 Deadline

Senate Passes Amended Version of "COVID-19 Bankruptcy Relief Extension Act of 2021" Ahead of March 27 Deadline

ABI Bankruptcy Brief

March 25, 2021

ABI Bankruptcy Brief

Senate Passes Amended Version of "COVID-19 Bankruptcy Relief Extension Act of 2021" Ahead of March 27 Deadline

As key bankruptcy relief provisions passed last year are due to sunset on March 27, the Senate last night passed by unanimous consent an amended version of H.R. 1651, the “COVID-19 Bankruptcy Relief Extension Act of 2021.” The legislation was amended to only include the CARES Act bankruptcy provisions, which will be extended one year to sunset on March 27, 2022. According to Hill sources, the amendment struck section 2(c) from the bill, which was the section extending the bankruptcy provisions of December's “Consolidated Appropriations Act of 2021” (CAA) that are due to sunset on December 27. While the COVID-19 Bankruptcy Relief Extension Act originally proposed the CAA provisions to expire at the same time as the CARES bankruptcy provisions on March 27, 2022, the amendment means that the CAA provisions will still expire in eight months. The Senate-amended version of H.R. 1651 now heads back to the House of Representatives for passage potentially before the end of the week.

Overall, the legislation would extend personal and small business bankruptcy relief provisions that were part of last year's CARES Act through March 2022. Some of the key provisions of last year's relief packages were the increased debt limit to $7.5 million for small business debtors electing to file under subchapter V and allowing individuals to seek COVID-19–related hardship modifications, among other changes. Senate Judiciary Chair Richard Durbin (D-Ill.) and Ranking Member Chuck Grassley (R-Iowa) introduced S. 473 on February 25 to extend the bankruptcy provision sunsets, and House Judiciary Committee Chairman Jerry Nadler, D-N.Y., introduced H.R. 1651, the House companion, on March 8. ABI on March 5 sent a letter to Senate Judiciary Committee leadership supporting S. 473, the "COVID-19 Bankruptcy Relief Extension Act," to extend, for another year, bankruptcy-relief provisions due to sunset in the 2020 CARES Act and December 2020 omnibus appropriations bill. “There is no doubt that the COVID-19 pandemic and its aftermath will continue to put significant strain on U.S. small businesses in the near future and perhaps for years to come,” ABI Executive Director Amy Quackenboss wrote in the letter to Sens. Durbin and Grassley. “By extending the increased debt limit of the SBRA, the COVID-19 Bankruptcy Relief Extension Act offers much-needed relief to a growing number of U.S. small businesses who find themselves in need of reorganizing in order to stay in business.” Click here to read ABI’s letter.

For information on SBRA, including the CARES Act amendments, be sure to visit ABI's SBRA Resources page.

To find out about the consumer and business provisions of the CAA, be sure to check out ABI's recent podcasts.

USTP Provides Notice to Ch. 7 and 13 Trustees Regarding Treatment of Recovery Rebates and Tax Credits under Latest Stimulus

The U.S. Trustee Program today issued a notice to chapter 7 and chapter 13 trustees regarding the treatment of recovery rebates and tax credits for consumer bankruptcy debtors under the American Rescue Plan Act of 2021, , Pub. L. No. 117-2 (the “ARP”). The ARP provides relief for qualified individuals to address the impact of COVID-19, including additional recovery rebates and expanded child tax credits. "Chapter 7 and 13 trustees should not consider recovery rebates or child tax credits in administering estate assets or calculating disposable income in chapter 13 repayment plans," according to the USTP notice. "Trustees who believe that the specific facts in a case may require a different result are directed to contact the U.S. Trustee prior to taking any action to administer recovery rebates or to object to a chapter 13 plan based on the treatment of recovery rebates or the additional tax credit under the ARP." Additionally, the notice said that U.S. Trustees will not consider recovery rebates or additional child tax credits under the ARP in making means test calculations, filing motions to dismiss for abuse under section 707(b)(2) and (3), objecting to chapter 13 plans, or taking related actions. Click here to read the full notice.

Senate Passes PPP Bill, Extending Loan Applications Through May

The Senate approved a bill extending the deadline for applying for a Paycheck Protection Program loan to May 31, sending the legislation to the White House for President Biden’s signature days before the current March 31 deadline, the Wall Street Journal reported. Small-business advocates had pushed for an extension of the deadline after the Biden administration made a series of changes to the program aimed at increasing access to the funds for businesses owned by women, minorities, and rural residents. The legislation will give firms until May 31 to apply for a loan through the program and the Small Business Administration will face a June 30 deadline to process the applications. The Paycheck Protection Program, or PPP, offers forgivable loans to small businesses harmed by the pandemic. The government guarantees the loans lenders issue through the program. The House approved the extension last week with broad bipartisan support. The Senate approved the bill 92-7 after voting down two Republican amendments. Passage of the PPP extension comes soon after Congress passed a $1.9 trillion coronavirus relief bill. Along with other forms of economic assistance and small business aid, that bill provided $7 billion to the PPP to expand its eligibility. (Subscription required.)

Unemployment Claims Sink to Pandemic Low of 684,000

The number of Americans filing for first-time unemployment benefits fell to the lowest number since the onset of the COVID-19 pandemic, according to the Labor Department, reported. Data released today showed 684,000 Americans filed first-time jobless claims in the week ended March 20. Analysts surveyed by Refintiv were expecting 730,000 filings. The prior week’s reading was revised up by 11,000 to 781,000. Continuing claims, or the number of Americans who continued receiving unemployment benefits, fell to 3.87 million for the week ended March 13, down from an upwardly revised 4.134 million the previous week. The drop in claims occurred during the same week that President Biden signed the $1.9 trillion American Rescue Plan that extended a $300 per week unemployment supplement until Sept. 6. The plan also sent $1,400 checks to most Americans and $350 billion to state and local governments, among other things.

ASM Spotlight: Don't Miss "The State of the Industry: Perspectives, Opportunities and Predictions" Plenary

ABI’s Annual Spring Meeting returns April 12-22, bringing top bankruptcy practitioners, judges and academics together via an enhanced virtual platform to discuss the most important issues facing the profession. “The State of the Industry: Perspectives, Opportunities and Predictions,” the opening plenary session, sets the stage for the conference by discussing the economic, scientific and behavioral influences that will, at least in part, shape the restructuring landscape in the coming year. Led by a major international media organization, the panel discussion will include leaders in industry, economics, banking and finance, and will focus on macroeconomic predictions for 2021, industry expectations and risks, and how the pandemic and COVID-19 vaccine will impact the economy in 2021 and thereafter.

Evolve and grow your practice by registering for ABI's Annual Spring Meeting today!

Submissions for Asset Sales Committee’s “Asset Sale of the Year” Award Extended to April 5!

ABI’s Asset Sales Committee has extended the application period for its 3rd Annual Asset Sale of the Year Award. Submissions are now due by Monday, April 5, 2021. Criteria for submissions include:

• Completion of a sale that was strategic and provided stakeholders with value;
• A display of excellence across the full spectrum of the sale process, from the initial targeting through pursuit, structuring and financing to complete a transaction;
• A sale that reflects a high level of professional expertise in the design of the transaction, and that tested creativity and skill in completing the transaction; or
• A sale of strategic or legal significance and impact (winning entries might focus on overcoming challenges to complete the sale, innovative financial engineering, and motivating agreement across multiple stakeholders)

A bankruptcy sale (via either § 363 or a plan) that closed between January 1 and December 31, 2020.

At least one professional involved in the sale must be a member of the Asset Sales Committee as of the nomination deadline. Self-nominations are permitted.

Click here for more information.

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New on ABI’s Bankruptcy Blog Exchange: CFPB complaints Skyrocket as Credit Reporting Issues Again Top the List

Complaints to the Consumer Financial Protection Bureau jumped 54% to 542,300 in 2020, according to a recent blog post. Concerns about credit reports have long outnumbered those in other categories and jumped significantly as a share of the total from 2019.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

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