COVID-19 Bankruptcy Relief Extension Act: Bankruptcy Provisions Of The 2020 Cares Act Extended – Insolvency/Bankruptcy/Re-structuring
United States: COVID-19 Bankruptcy Relief Extension Act: Extension of the bankruptcy provisions of the 2020 Cares Act
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On March 27, 2020, the federal government passed the Coronavirus Assistance, Relief and Economic Security Act (CARES), which provides relief to a wide range of people and industries. The CARES law contained certain provisions relating to the Bankruptcy Code. Note, the CARES law:
- Amends section 1182 (a) (A) to increase the overall debt limit for small businesses seeking relief under Subchapter V of Chapter 11 to $ 7,500,000 from $ 2,725,625.
- Changes the definition of “income” in Chapters 7 and 13 of the Bankruptcy Code to exclude from monthly income payments made under the federal COVID-19 law and clarifying that disposable income for Chapter 13 plans does not include not these payments.
- Allows modification of a confirmed plan under Chapter 13 at the request of the debtor if the debtor is experiencing or has experienced significant financial hardship due to COVID-19.
Upon the expected expiry of these CARES provisions on March 27, 2021, Congress unanimously adopted the COVID-19 Bankruptcy Relief Extension Act of 2021. This extended these provisions for an additional year until March 27, 2022.
This extension will allow many small businesses and struggling employee debtors to benefit from enhanced bankruptcy protections in the uncertain business climate caused by COVID-19. However, this will not change the mechanics of administering the affected bankruptcy assets.
Originally posted April 09, 2021
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