The Effect of the COVID Act on the Bankruptcy Preference Laws
The “Consolidated Appropriations Act, 2021” (“COVID Act”) effective December 27, 2020 amends Section 547 of the Bankruptcy Code and protects suppliers and landlords through agreement to defer payments made after March 13, 2020. Specifically, an agreement entered into on or after March 13, 2020 to defer or postpone payments under [...]
Commercial Landlord Tenant Issues in Bankruptcy — Especially During the Pandemic
Introduction Commercial tenants are defaulting at a faster rate due to the pandemic. But whether we are in a pandemic or not, commercial landlords need to know what to do if their tenants file bankruptcy be it Chapter 7 (liquidation) or Chapter 11 (reorganization). In this regard, the landlord [...]
UPDATE: COVID-19, Business Interruption, and Insurance Coverage
A recent opinion, Urogynecology Specialist of Florida v. Sentinel Insurance Company, LTD., (M.D. Fla. Sept. 24, 2020) 6:20-cv-1174-ORL-22EJK, sheds light on approaches to COVID-19 and the 2020 Shutdown -- and the impact to business. The United States District Court for the Middle District of Florida refused to dismiss a COVID-19 [...]
Contractual Obligations, Force Majeure, and COVID-19
At this point it is premature to determine how Texas courts will decide the breadth and applicability of a force majeure clause related to COVID-19 . That said, do not expect courts to allow a party to invoke force majeure if the event was not specifically identified and especially [...]
The Necessity for Co-Tenancy and Other Related Clauses
The retail apocalypse began long before COVID-19 . With many retailers already over-leveraged and shopping patterns changing, retailers were already shuttering stores, seeking a reduction in rent and/or filing bankruptcy. Afterall, many major retailers including anchor tenants like Sears, had already filed bankruptcy. COVID-19 has merely sped up the process. [...]
Bankruptcy Usage of Key Employee Retention Plans and Key Employee Incentive Plans
Introduction Creditors in mega-bankruptcies and people in general are up in arms over the ridiculous bonuses companies are giving their “key” employees and executives -- styled as “retention bonuses.” Pre-Bankruptcy Retention For practical reasons, companies facing financial uncertainty need to retain key employees. Therefore, the Bankruptcy Code enacted a [...]
Get Out of Jail Cards for Leveraged Buyout Fraudulent Transfers
Though the pandemic is the cause of the rising number of retail bankruptcies, major retailers were facing cash flow and insolvency issues prior to COVID-19. Many of them were over-leveraged by virtue of funding the leveraged buyouts of prior ownership. With the change in the retail environment, retailer buyers [...]
The Retail Apocalypse Continues
Retailers are reporting that at least 4,300 stores will close in 2020 and that this number will increase. Prior to the pandemic, Cushman & Wakefield estimated that as many as 12,000 major chain stores could close in 2020. Coresight Research predicted 15,000 store closures prior to the pandemic and [...]
Mall of America Fails to Pay Mortage – Sign of Things to Come for Other Malls and Shopping Centers?
People talk about retail tenants being in financial disarray and filing bankruptcy, but what about our malls and shopping centers? They are hurting, too. If their tenants are not paying rent, taxes, insurance, and utilities, this impacts landlords, who are also struggling to meet their financial obligations, including their [...]
Bankruptcy Courts Allow Business Debtors to Defer Rent in Response to COVID-19
In re Pier I Imports Inc., 20-30805 (Bankr. E.D. Va. May 10, 2020) At least one bankruptcy court has crafted a remedy not otherwise addressed prior to the Coronavirus outbreak. For instance, the bankruptcy court overseeing the Pier 1 Imports bankruptcy case allowed Pier 1 to temporarily defer rent owed [...]
