Part of the new $900 Billion COVID-19 relief packaged entitled Division FF, “Title X-Bankruptcy Relief,” provides for certain updates to highly contentions matters facing the bankruptcy courts since the start of the pandemic. Namely, Division FF addresses issues regarding the assumption or rejection of nonresidential leases, the payment of related pre- and post-petition rents, and the availability of PPP loans to debtors. A few key provisions of Division FF are:
- With court approval, Subchapter V small business debtors may have additional time to pay rent owed on nonresidential real estate. The time period is extended from 60-days after the petition date to 120 days after the petition date.
- In traditional Chapter 11 cases, debtors-in-possession or trustees now have 210 days from the petition date to assume or reject unexpired nonresidential leases—this is extended from the prior 120 days.
- Payments made by a debtor to a landlord within the 90-day pre-petition preference period (for rent due before March 13, 2020), are exempt from preference actions.
- The bill also authorizes debtors to obtain PPP funds on an expedited schedule and voids terms in any existing loan documents that would have prohibited the debtor from obtaining such funds.
Unfortunately, the new bill does not appear to extend the March 27, 2021 sunset of the expanded $7.5 Million debt limit to qualify as a small business debtor under Subchapter V.