Government measures in key jurisdictions 5th edition - Flipbook - Page 163
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 wellacknowledged 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 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 statemandated closures) are considering bankruptcy as a viable strategy for survival.
•
For more details, please refer to our client alerts 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 alerts 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 nonpayment 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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