The “Coronavirus Aid, Relief, and Economic Security Act,” or “CARES Act” grants additional relief for Small Business Reorganization Debtors under 11 U.S.C. § 1181 et seq.
By: Solymar Castillo Morales, Esq.
March 27, 2020
As part of the ” Coronavirus Aid, Relief, and Economic Security Act ,” the ” CARES Act ” or “the Act,” signed into law on March 27, 2020, the Congress of the United States enacted additional benefits for “small business debtors” in bankruptcy reorganizations.
The CARES Act amended several of the provisions introduced by the Small Business Reorganization Act of 2019, which entered into effect on February 20, 2020. Section 1113 of the CARES Act increased the eligibility threshold for debtors filing as small business debtors under the provisions of Chapter 11 of the Bankruptcy Code, 11 U.S.C. §1181 et seq. , from $2,725,625 of debt to $7,500,000 for the next year ( it will return to the original threshold afterward). The Act also amends the definition of “income” under section 101(10A)(B(ii) of title 11, to exclude from the calculation of current monthly income: “(V) Payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus disease 2019 (COVID-19).” Such payments will also be excluded from the determination of “income” to confirm a reorganization plan. These exclusions will apply for all cases filed before, on, and after the enactment of the Act. In addition, the CARES Act provides that, for reorganization plans confirmed under section 1329 of Chapter 13 of the Bankruptcy Code before March 27, 2020, upon the request of the debtor, and after notice and a hearing, the debtor may request the modification if it “is experiencing or has experienced a material financial hardship due, directly or indirectly, to the coronavirus disease 2019 (COVID-19) pandemic”. The modification will be allowed subject to the debtor’s compliance with the applicable requisites for confirmation of a new plan, and the amendments may not provide for payments over a period that expires more than seven (7) years after the time that the first payment under the original confirmed plan was due.
Goldman Antonetti & Cordóva, LLC stands ready to assist you and your business to adjust to Puerto Rico’s regulatory and legal changes. If you have any specific questions about your case, or need further assistance regarding proceedings before the federal district court during this crisis, please contact any of the following members of our firm (note that during this emergency, it will be easier for you to communicate with us through electronic mail, as provided below):
|Solymar Castillo Morales|
|Carlos A. Rodríguez Vidal|
|Rossell Barrios Amy|
|Edgardo Colon Arrarás|
|Annette Cortés Arcelay|
|Rosanna Rivero Marín|
|Wilda Rodríguez Plaza|
Disclaimer:Although the information included in this document may concern legal issues, it is not a legal opinion or professional advice and clients shall not use it as such. We assume no responsibility or liability of any kind for any information contained herein, and we expressly disclaim all liability for any claim for damages arising from the use, reference to, or reliance on, such information. If legal or other expert assistance is required, the services of a competent professional should be sought.