Key insights to help you navigate COVID-19 related bankruptcy and other debt restructuring options
There is no question that the COVID-19 pandemic is causing many businesses to suffer interruptions and financial distress. Some business owners are contemplating bankruptcy and other debt restructuring options. Buckingham attorneys have created a list of key insights that will help you manage this economic landscape and understand your options from an experienced legal perspective as to limit the damage of this health crisis on your business.
Here is what you need to know NOW to protect your business’ future:
- There are a myriad of financial assistance programs created at the federal, state and local levels, but those resources are being used quickly. Quick and decisive action may increase your ability to take advantage of these programs.
- At the federal level, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) has established several financial assistance programs that you may be able to utilize, such as loans that may be forgiven under the Paycheck Protection Program and emergency loans under the Small Business Administrations’ Economic Injury Disaster Loan program, and the Federal Reserve’s Main Street Lending Program.
- Oftentimes financial distress can be managed if intervention is commenced early. Pro-active communication with your lender, vendors, and other creditors about cash flow and the obstacles your business is facing is more important than ever as these discussions may lead to resolution and compromise obviating the need to file a bankruptcy. During this time, creditors may be more willing to enter into forbearance agreements or other solutions if communication is initiated before payments are missed.
- If bankruptcy protection ultimately is necessary, the CARES Act temporarily has raised the debt ceiling under the Small Business Reorganization Act of 2019 (the “SBRA”) from $2,725,625 to $7,500,000. This means that many more small businesses will have access to the SBRA, which amended the Bankruptcy Code to provide a simpler, more efficient chapter 11 process for small businesses.
Buckingham’s Bankruptcy team is here to assist you if you need to file a bankruptcy or otherwise restructure your debt.
No matter the case, we focus on developing effective, practical approaches that help you weather your current financial situation, get you back on your feet, and build for a better future.