Government measures in key jurisdictions 3rd edition final - Flipbook - Page 145
United States of America
Insolvency
•
The CARES Act modifies the Small Business Reorganization Act (SBRA) and greatly expands the
restructuring options available to businesses with less than US$7.5 million in debt through March
27, 2021. It is effective immediately. Previously, only businesses with up to $2.7 million in debt could
use the SBRA’s expedited procedures. Small business debtors have traditionally been wary of a
reorganization process under Chapter 11 of the Bankruptcy Act (which provides for reorganizations),
despite its well-acknowledged benefits, due primarily to the potential cost and disruption it often
causes. For those businesses that qualify, the SBRA is intended to alleviate those concerns and to
make small business bankruptcies proceed under a faster timeline and at reduced cost.
•
We are not surprisingly seeing a major uptick in bankruptcy filings by retailers. Even when the
economy was firing on all cylinders, retailers were facing rising expenses, changing consumer
shopping habits, and stiff competition-leading many iconic retail brands in the U.S. and around
the world into bankruptcy. As the coronavirus (Covid-19) pandemic and economic crisis have
taken hold, it is not surprising that even more retailers (whether teetering prior to the pandemic
or crippled as a result of state-mandated closures) are considering bankruptcy as a viable
strategy for survival.
•
For more details, please refer to our client alert here & here.
•
The Covid-19 pandemic has significantly affected the global supply chain. In addition to duties,
liabilities, and defenses created by contract, businesses also need to be conscious of a number of
common law duties and obligations that may arise as a result of what is happening around the
globe. These can include extra-contractual defences and concepts such as force majeure,
impossibility of performance, and frustration of purpose. We are beginning to see litigation begin in
earnest, albeit under different circumstances with virtual hearings and other modified protocols.
We are encouraging clients to be proactive about their possible disputes. Typically, a party does
not have a legally valid breach of contract claim until after a breach occurs. But that does not mean
you have to sit idly by when you can see the writing on the wall.
•
For more details, please refer to our client alert here & here.
Has the government
made any changes
to insolvency
legislation?
Contractual
Issues
What measures
have been taken
to reinforce
contracts?
Property
•
The impacts of Covid-19 have led many landlords and tenants to consider their options under
existing leases to determine the best path forward and what actions to take if someone on the
property has contracted the virus. As a result, many states and local jurisdictions have taken
action to prohibit certain evictions based on non- payment of rent and to delay foreclosures by
mortgage lenders. We are starting to see litigation around these issues; however, many landlords
and lessees are still negotiating resolutions of claims. Additional state and local legislation will
also likely impact leases (and mortgage) obligations by residential and some commercial
tenants. Also, there are special considerations for multi-family residential property owners and
property holders in light of the virus.
•
For more details, please refer to our client alerts here and here.
Have any changes
been made to
the laws around
property, rent and
enforcement?
Government measures in key jurisdictions
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