New Bankruptcy Code Section Will Help Landlords and Suppliers and Their Tenants and Customers Affected by Covid-19

Richard A. Barkasy and Kenneth R. Puhala published a client alert, “New Bankruptcy Code Section Will Help Landlords and Suppliers and Their Tenants and Customers Affected by Covid-19.”

In the Consolidated Appropriations Act of 2021 (the “Act”), signed into law by President Trump on December 27, 2020, Congress reduced the risk for companies in working with businesses that have been negatively impacted by Covid-19. The Act allows landlords and suppliers of goods or services to enter into agreements to postpone payment by tenants or customers of past due amounts without concern that the late payments will later be clawed back as preferences under the Bankruptcy Code.

The Act should benefit the economy and save jobs by encouraging creditors to assist tenants and customers as they try to navigate their way through the financial pressures resulting from Covid-19. It should also increase the recovery of creditors who agree to postpone payments during the pandemic by helping to keep their tenants and customers out of bankruptcy and by shielding deferred payments from clawback if they ultimately have to seek bankruptcy protection.

Click here to read the full client alert. Please visit our Covid-19 Resource Center for additional guidance.

Also, click here to register for a 12:00 noon, February 25 In-House Counsel Roundtable on Bankruptcy, Restructuring, and Covid-19 Impact on Businesses, featuring Schnader’s Richard Barkasy and Kenneth Puhala and hosted by the Association of Corporate Counsel, Greater Philadelphia Chapter.