Recent legislation has expanded opportunities for commercial landlords and tenants to negotiate deals to defer certain rent payments during the COVID-19 pandemic with less fear of later losing the arrearage payments as preferences if the tenant files for bankruptcy. These changes, enacted in the Consolidated Appropriations Act, 2021 (CAA), provide a safe harbor that can be used as parties negotiate how to weather current economic uncertainties. Continue Reading
The Securities and Exchange Commission (SEC) has adopted a series of amendments to rules under the Securities Act of 1933 (Securities Act) applicable to offerings exempt from public registration. The amendments will become effective 60 days after they are published in the Federal Register, which will likely be in the first half of 2021.
The purpose of the amendments is to simplify, harmonize, and improve certain aspects of the exempt offering framework. The amendments are intended to promote capital formation while preserving or enhancing important investor protections. The most significant changes include:
- a single comprehensive rule to address integration across a broad range of settings;
- amendments to clarify and update rules concerning investor communications;
- updates to verification procedures for “accredited investor” status under Rule 506(c) of Regulation D; and
- increases in offering size limits for certain exempt offerings.
This week, the Biden-Harris administration announced a number of reforms to the Paycheck Protection Program (PPP) aimed at increasing lending to small businesses and sole proprietors, as detailed further in this fact sheet released by the White House. These reforms include:
- A 14-day period beginning Wednesday, February 24, 2021 and ending March 10, 2021, during which only those businesses with less than 20 employees can apply for a PPP loan. According to the White House release, 98% of small businesses have fewer than 20 employees and while the share of PPP funding going to smaller business, businesses in rural areas, and minority-owned businesses is rising, the two-week exclusive period and related efforts aims to further increase the share of PPP loans going to these smaller businesses.
- Revising the loan amount formula for sole proprietors, independent contractors, and self-employed individuals, allowing such borrowers to use the gross income line on Schedule C of their tax returns for purposes of calculating maximum available funds. Previously, many small businesses were excluded from receiving PPP funding because of the requirements to exclude taxes and other expenses.
- Setting $1 billion in PPP funds aside for sole proprietors, independent contractors, and self-employed individuals in low and moderate-income areas.
- Eliminating certain exclusionary restrictions, allowing small business owners with prior non-fraud felony convictions to access PPP funds, and removing the restriction on delinquent student loan borrowers accessing PPP funds.
- Permitting use of ITIN numbers to apply for relief, clarifying that Green Card holders and other permanent residents are eligible to receive PPP loans.
In addition, the fact sheet outlines certain other transparency, accountability, and lender engagement initiatives to be addressed on an ongoing basis. This includes further work to address waste, fraud, and abuse across federal programs, including the PPP; encouraging self-reporting of demographic data with a revamped PPP application; updating the SBA website to make it easier for applicants to find resources on relief options; engaging stakeholders to learn about the challenges small businesses are facing and how these issues can be addressed by relief programs; and launching a new initiative to increase the opportunity for lenders to ask questions and provide recommendations about the PPP.
If you have questions regarding eligibility for the PPP program, recent reforms, or existing SBA guidance, our team would be happy to help.
On January 14, 2021, the United States Supreme Court issued its opinion in City of Chicago v. Fulton, addressing whether the “mere retention” of bankruptcy estate property constituted an act to “exercise control over property of the estate” in violation of the automatic stay under § 362(a)(3) of the Bankruptcy Code. In an 8-0 opinion, the Court held that mere retention of property does not violate § 362(a)(3). However, the Court did not address whether such retention may violate the automatic stay under the other provisions of § 362(a) and did not decide how a creditor’s turnover obligations under § 542 of the Bankruptcy Code operate. Fulton abrogates Ninth Circuit authority State of Cal. Emp. Dev. Dep’t v. Taxel (In re Del Mission Ltd.), 98 F.3d 1147 (9th Cir. 1996). Continue Reading