Cares Act Bankruptcy Provisions Extended For Another Year | Fox Rothschild LLP

The “COVID-19 Bankruptcy Relief Extension Act of 2021” was enacted by President Biden on March 27, 2021, extending by one year key provisions of the COVID-19 Bankruptcy Relief Act that was enacted into the CARES Act.

Section 1113 of the CARES Act, which temporarily amended bankruptcy law to help individuals and businesses affected by the coronavirus pandemic on March 27, 2020, has been extended by the COVID-19 Bankruptcy Relief Extension Act of 2021 and includes the following provisions:

  • Small Business Reorganization Act (TAGS) Subchapter V Business Debt Limit Increased From $ 2,725,625 to $ 7.5 Million For Another Year – Until March 27 2022. This allows small businesses with debts below a certain debt limit to file for bankruptcy and reorganize further. quickly and cheaper.

Subchapter V was promulgated under the SBRA on February 19, 2020, just before the COVID-19 pandemic, as a subchapter of Chapter 11. The goal was to help small business debtors get out of business. reorganize while reducing expenses and making filing faster and easier. bankruptcy. Subchapter V is available to a person or entity carrying on a business activity with secured and unsecured debts liquidated unconditional on the date of filing the petition in an initial amount not exceeding $ 2,725,625, in which the majority of these debts arise from trade debts or business activities of the debtor.

  • The definition of “income” in section 1325 (b) (2) for the purposes of filing bankruptcy is temporarily amended to exclude coronavirus-related payments received from the federal government until March 27, 2022.
  • The definition of “income” in section 1325 (b) (2) for the purposes of filing bankruptcy is temporarily amended to exclude coronavirus-related payments received from the federal government until March 27, 2022.
  • In a Chapter 13 plan, disposable income should not include payments related to the coronavirus.
  • In a Chapter 13, individuals and families experiencing material hardship due to the coronavirus pandemic can request changes to their plans, including seeking to extend the plan for up to seven years from the date of the initial payment. plan.

These provisions will expire or expire on March 26, 2022, unless they are further extended.

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